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That strategy has driven revenue higher, but it has also brought headaches. Thursday, for example, the bank agreed to settle Department of Justice charges that it had discriminated against African-American and Hispanic borrowers by steering them into expensive mortgages. The bank denied the charges but said it wanted to get the matter behind it. The mortgage-heavy strategy also makes the bank vulnerable to mortgage-repurchase costs. Wells and other banks have been buying back soured mortgages from investors who bought them before the financial crisis and now say they were misled about their quality. Wells Fargo said it added $669 million for mortgage repurchases, compared with $242 million a year ago, mostly because it expects more demands from the government-sponsored agencies Fannie Mae and Freddie Mac. Sloan, the CFO, warned that the build-up might continue. But he and CEO John Stumpf also said the bank would review claims carefully, and wouldn't buy back mortgages just because investors demanded it. "We are going to push back," Stumpf said. Total lending increased, including commercial and industrial loans. The bank had a record amount of mortgage applications. Fees that the bank charged on credit and debit cards fell 30 percent, partly because of new federal laws that restrict how much banks can charge. The bank also added to reserves for potential losses in the unit that caters to businesses. Assets in the wealth management division fell, and revenue from the brokerage fell. Gains from trading and stock investments fell. The bank is also cutting expenses. It eliminated about 2,200 jobs, or 1 percent of its work force compared to a year ago. Salaries rose 3 percent, though employee benefits declined 10 percent. The bank cut spending on equipment, postage and advertising, though travel and entertainment increased. Wells Fargo's stock jumped $1.06, or 3.2 percent, to close at $33.91 Friday.
[Associated
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