Report: Feds probe Golden West
San Francisco Business Times
The Securities and Exchange Commission is investigating whether mortgage giant Golden West Financial Corp. misled borrowers with its lending practices.
According to Reuters, regulators are also looking into what the Oakland-based company told Wachovia Corp. about its portfolio before the Charlotte, N.C., bank bought Golden West in 2006.
U.S. Attorney Joseph Russoniello of San Francisco told the news agency that the SEC and the Justice Department are “looking at the sale of Golden West as well as Golden West’s lending practices.”
Wachovia’s $25 billion acquisition of Golden West led to its near collapse as the mortgage market soured. Many Golden West borrowers have been unable to pay their mortgages after initial low payments reset at higher rates.
Late last month, Wachovia (NYSE: WB) reported a third-quarter net loss of $23.9 billion, or $11.18 per share. The bank expects to lose about $26.1 billion in the $120 billion “pick-a-pay” loan portfolio that was a hallmark of Golden West.
Regulators urged Wachovia to merge with another company in late September. San Francisco-based Wells Fargo & Co. (NYSE: WFC) is buying Wachovia in a deal slated to close next month.
Charlotte Business Journal
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