The Federal Trade Commission began sending out checks to 450,177 homeowners it said were charged excessive fees by Countrywide Home Loans beginning in 2005. The reimbursements, totaling $108 million, are part of a settlement between Countrywide-now owned by Bank of America-and the FTC.
Agency chairman Jon Leibowitz termed Countrywide's fee charges "unconscionable," but neither Countrywide nor its now-parent BOA admitted any wrongdoing. "Bank of America agreed to this settlement to avoid the expense and distraction associated with litigating the case," BOA spokesman Rick Simon said.
In an unrelated action, the Federal Reserve Board tagged Wells Fargo with an $85 million civil penalty over allegations that company employees, from 2004 to 2009, exaggerated income information on some mortgage applications and improperly steered some borrowers into higher-interest-rate subprime loans. According to Fed estimates, more than 10,000 people may be owed money, in amounts ranging from less than $1,000 to more than $20,000.
Although Wells Fargo technically didn't admit wrongdoing, the company's chief executive John Stumpf issued a statement noting that "the alleged actions committed by a relatively small group of team members are not what we stand for at Wells Fargo." The Federal Reserve banned 16 former employees of Wells Fargo Financial from being employed in the banking industry again.
After last year's merger with Wachovia, Wells Fargo-now the nation's fourth-largest bank-shut down its more than 600 Wells Fargo Financial locations.
Borders, the bookseller that grew from a single 800-square-foot used bookshop in Ann Arbor, Mich., in 1971 to become the nation's second-largest bookstore chain, announced that it will shut down all its stores and cease operations. The bankrupt company, unable to find a buyer, said it will begin liquidation of its remaining 399 stores immediately.
"Borders has been facing headwinds for quite some time, including a rapidly changing book industry, eReader revolution, and turbulent economy," Borders Group president Mike Edwards wrote in a letter to the company's 10,700 employees. "We put in a valiant fight, but regrettably in the end we weren't able to overcome these external forces."
The bookseller, which filed for bankruptcy protection in February, has not turned a profit since 2005. Since then, losses have averaged about $150 million annually.
At one time, Borders Group had more than 36,000 employees and 550 stores in the United States and overseas.
Convicted-felon-turned-fraud-investigator-turned-pastor Barry Minkow is heading back to jail, this time for his role in a stock manipulation scheme. Minkow, who resigned in mid-March as pastor of Community Bible Church in San Diego, was sentenced to five years in prison and ordered to pay $583 million in restitution for distributing false information aimed at driving down the stock price of a Florida homebuilding company.
"His hubris is what caused this problem," Minkow's attorney Alvin Entin said at the sentencing, quoted by Bloomberg. "His narcissism is what caused this problem."
Minkow, convicted in 1988 of 57 counts of fraud and conspiracy, served seven years of a 25-year sentence. While in prison, he became involved in Christian ministry and studied theology. Upon release, he founded the Fraud Discovery Institute and worked with federal investigators on several cases.
The Los Angeles Times reported in early July that leaders of Community Bible Church, where Minkow had served as pastor since 1997, sent a letter to Minkow's attorney accusing their former pastor of improperly using church funds to finance the Fraud Discovery Institute. So far, no charges have been filed in connection with that allegation.