Wells Fargo, Goldman receive Wells notices over MBS disclosures
Goldman Sachs disclosed the Wells notice in its 10-K, while Wells reported the notice in its 2011 annual report to shareholders.
The notice from the Securities and Exchange Commission concerns "the disclosures contained in the offering documents used in connection with a late 2006 offering of approximately $1.3 billion of subprime residential mortgage-backed securities underwritten by GS&Co.," Goldman said in its regulatory filing. "The firm will be making a submission to, and intends to engage in a dialogue with, the SEC staff seeking to address their concerns."
As of December 2011, the outstanding balance of loans transferred to trusts and other mortgage securitization vehicles during the period 2005 through 2008 was approximately $42 billion, according to Goldman's regulatory filing.
At Wells Fargo, the Wells notice also relates to the bank's disclosures in mortgage-backed securities offering documents.
Other banks also face potential government probes over whether they misrepresented the quality of loans placed into mortgage-backed securities.
During his State of the Union address in January, President Barack Obama announced the formation of a mortgage fraud task force to look into fraud involving mortgage-backed securities.
The new federal task force, led by New York Attorney General Eric Schneiderman, sent subpoenas to the 11 largest financial institutions in late January.