NYC Comptroller Renews Call for Audits of Banks’ Foreclosures
February 08, 2012, 1:56 PM ESTBy Donal Griffin
Feb. 8 (Bloomberg) -- New York City Comptroller John C. Liu, who oversees $113.7 billion in city pension funds, renewed his request that three of the biggest U.S. banks conduct independent audits of their mortgage and foreclosure practices.
Liu said the audit committees of Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. should report their findings on the banks’ internal controls by Sept. 30. Shareholders may vote on the proposals at the banks’ annual meetings later this year. Liu, 45, whose office said it owns $855 million of shares in the three banks, filed similar requests in 2010 that were rejected at annual meetings last year.
The lenders are among firms negotiating a settlement with a group of state attorneys general and federal officials, following a nationwide probe into disclosures that banks were using flawed documents in seizing homes.
“The banks’ anticipated settlement with state AGs will bring badly-needed relief to families at risk of losing their homes, but the perverse policy incentives that are at the root of harmful mortgage practices are still pervasive,” Liu said in an e-mailed statement. “Bank directors need to step forward and address the underlying conflicts that lead to unnecessary foreclosures and costly settlements.”
Scott Silvestri, a spokesman for Charlotte, North Carolina- based Bank of America, and Shannon Bell for New York-based Citigroup declined to comment on Liu’s latest request.
“Our board considers all shareholder proposals as part of its normal process,” Mary Eshet, a spokeswoman for San Francisco-based Wells Fargo, said in an e-mailed statement.
Prior Request Rejected
Wells Fargo, the biggest U.S. mortgage lender, recommended that shareholders vote against Liu’s proposal last year. An independent review wouldn’t be “an effective use of the company’s resources and could distract our efforts to cooperate with reviews undertaken by our federal banking regulators,” the bank said in a filing.
Bank of America, the second-biggest U.S. bank, also recommended against Liu’s previous request because the bank said it had already taken “significant steps” to improve its foreclosure process.
Citigroup, the third-biggest U.S. lender, said last year that the board already receives independent reviews. The bank’s chief auditor reports to the board’s audit committee, which is staffed with independent directors, rather than a member of the bank’s management, according to a filing.
Liu requested in December that Wall Street banks Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley toughen so-called clawbacks, which allow the firms to reclaim pay awarded to employees who acted improperly. Goldman Sachs and Morgan Stanley, both based in New York, said this week they will re-write their clawback policies in response.
--With assistance from Christine Harper, David McLaughlin and Michael J. Moore in New York. Editors: William Ahearn, Steve Dickson.
To contact the reporters on this story: Donal Griffin in New York at dgriffin10@bloomberg.net
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
