A group of seven public pension systems with a combined $430 billion in assets called on the boards of the four largest U.S. banks, including Bank of America, to review foreclosure practices, saying there’s a “fundamental” flaw in the companies’ methods.
The banks, which also include Wells Fargo, J.P. Morgan Chase and Citigroup, should report their findings on annual proxy statements to shareholders in coming months, the pension group said.
The group has $5.7 billion invested in the four banks, according to a statement from New York City Comptroller John C. Liu.
“The banks’ boards cannot continue to pretend the foreclosure mess is the result of technical glitches and paperwork errors,” Mr. Liu said. “There is a fundamental problem in their procedures that endangers not just homeowners, but shareholders, and local economies.”
The group includes the New York City Retirement Systems, Connecticut Retirement Plans & Trust Funds, Illinois State Board of Investment, Illinois State Universities Retirement System, New York State Common Retirement Fund, North Carolina Retirement Systems and Oregon Public Employees’ Retirement Fund.
Citigroup has received the letter and will review it with members of its audit committee and respond, said Shannon Bell, a bank spokeswoman. “We have confidence in our internal processes and controls,” she said.
Wells Fargo spokeswoman Mary Eshet said the bank had received the letter and is reviewing it. Joseph Evangelisti, a spokesman for J.P. Morgan, declined to comment.
Bank of America hired external auditors to review foreclosure processes last year and improved its procedures before resuming seizures, spokesman Rick Simon wrote in an e-mailed response to questions.
“The letter from the pension funds appears to bring up a concern that the bank is already addressing — the future prevention of compliance failures and restoration of confidence in the foreclosure processes,” he wrote. “The points they make have been brought up time and time again, reviewed and fully considered.”