Wells Fargo Fires 2 Employees in Connection with Low-Income-Housing Probe

(Bloomberg) -- Wells Fargo & Co. has fired two community-lending and investment employees in connection with a U.S. probe into the bank’s negotiation and procurement of low-income housing tax credits, according to people familiar with the matter.

  • Rick Davis, a senior vice president, and Bob Klixbull, a vice president, were fired after being suspended earlier this year, the people said.

Key Insights

  • The Justice Department is investigating whether Wells Fargo and other banks colluded with developers to lower the price of bids for low-income housing tax credits. The credits are part of a federal program created in 1986 to encourage the development of affordable housing units.
    • NOTE: 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.
  • Klixbull reported to Davis, who reported to Michael Lavine, head of low-income housing tax credit equity at the San Francisco-based bank.
  • Klixbull, Davis and Lavine didn’t immediately respond to requests for comment.
  • Wells Fargo spokeswoman Beth Richek declined to comment on personnel matters
    • “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 an email.
    • “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,” she said, referring to the tax credit program.

Get More

  • Click here for Sept. 25 story on the suspensions.

©2018 Bloomberg L.P.