A judge is set to rule on the bank’s motion to dismiss the complaint, which names the company, ex-CEO Tim Sloan and former CFO John Shrewsberry among the defendants.

A federal judge is poised to rule on Wells Fargo’s motion to dismiss a suit that alleges the bank routinely made risky commercial real estate loans using improperly inflated underwriting metrics in the years leading up to and into the pandemic that left the company and its shareholders vulnerable to losses in 2020.

The suit spotlights the minefield that CFOs and financial executives have navigated as they grappled with soaring real estate losses early in the pandemic amid broader scrutiny of mortgage underwriting practices. It also comes as an unrelated civil investigation is proceeding into allegations that the Trump Organization inflated property values to secure favorable terms on loans it was applying for or trying to modify.

The pleading alleges Wells Fargo had loose underwriting practices that were part of a strategy designed to win borrowers and grow its commercial real estate business, according to an amended complaint filed Aug. 31. At the same time, the class action alleges the practices contradicted assurances from bank executives that it used conservative and disciplined underwriting standards. Click to read more at www.cfodive.com.