Wells Fargo Suspends Employees Over Tax-Credit Probe
(Bloomberg) -- Wells Fargo & Co. suspended two employees in its community lending and investment unit amid a U.S. inquiry into the bank’s purchase of low-income housing tax credits, according to people familiar with the matter.
Rick Davis, a senior vice president, and Robert Klixbull, a vice president, were suspended, the people said. Klixbull reports to Davis, and both work under Michael Lavine, who heads low-income housing tax credit equity within Wells Fargo’s community lending and investment unit.
The Justice Department is looking into whether Wells Fargo and other banks colluded with developers to lower bids for low-income housing tax credits. The credits are part of a program created in 1986 that encourages affordable housing developments. The greater the spread between the price of the tax credit and its face value, the higher the return to the investor -- in this case, the banks.
Wells Fargo, which disclosed a U.S. government probe last month, is cooperating with the investigation and “is not in a position to make any additional statements beyond” previous regulatory filings, Wells Fargo spokeswoman Beth Richek said Tuesday in a statement.
“Wells Fargo is committed to providing financial solutions to support the development and rehabilitation of affordable multifamily housing in areas where there are the biggest needs,” Richek said in a statement. “Our investment in affordable housing has helped improve access to housing in cities across the country, and we remain committed to the affordable housing industry, including LIHTC projects.”
Davis, Klixbull and Lavine didn’t immediately respond to requests for comment.
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