By Jonathan Stempel and Peter Rudegeair
NEW YORK (Reuters) - The U.S. government on Thursday asked for permission to add a Wells Fargo & Co
In a letter to U.S. District Judge Jesse Furman in Manhattan, who oversees the case, the Department of Justice said the Wells Fargo Home Mortgage vice president it wants to add as a defendant played a "pivotal role" in allegedly causing the bank to not report defective home loans to the government.
Wells Fargo, which is also the fourth-largest U.S. bank, was accused in the October 2012 lawsuit of misleading the U.S. Department of Housing and Urban Development into believing its loans qualified for insurance from the agency's Federal Housing Administration, costing hundreds of millions of dollars.
Furman on September 24 rejected Wells Fargo's bid to dismiss the lawsuit, which was brought by U.S. Attorney Preet Bharara in Manhattan.
No individuals were originally named as defendants. The executive the government wants to add is identified in court papers as a male vice president of decision quality management.
Neither the bank nor the Justice Department would immediately confirm the name of the person who held that title at the time of the alleged wrongdoing. No settlement talks are scheduled, Thursday's letter said.
Federal investigators have received much criticism for failing to hold enough individuals accountable for activities contributing to the recent U.S. housing and financial crises.
One exception is Rebecca Mairone, a former midlevel executive at Bank of America Corp's
According to Thursday's letter, the government intends to sue the individual Wells Fargo executive under the federal False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
The bank called the effort "unwarranted" and said it would disrupt the case. "Wells Fargo is unaware of any new facts or circumstances warranting this action nor has the government explained why it is necessary to target an individual more than a year after first filing suit," spokesman Ancel Martinez said.
According to government court papers, the executive was in 2004 charged with ensuring the proper reporting of bad loans to HUD, but "no self-reporting occurred."
The government also said the executive decided in 2005 that fewer defective loans needed to be reported to HUD, but that the bank "did not even comply with its own unilaterally narrowed formulation of Wells Fargo's reporting obligation, and continued not to self-report any loans."
The case is U.S. v. Wells Fargo Bank NA, U.S. District Court, Southern District of New York, No. 12-07527.
(Reporting by Jonathan Stempel and Peter Rudegeair in New York; Additional reporting by Nate Raymond in New York and Aruna Viswanatha in Washington, D.C.; editing by Andrew Hay)