subprime lending

Wells Fargo has agreed to pay $85 million to settle civil charges over subprime lending - the largest ever fine imposed by the Fed in a consumer-enforcement case. Thousands of consumers could be compensated by up to $20,000 each.

General Motors will once again have its own in-house financing unit starting Friday, when the auto giant closes on its $3.5 billion purchase of AmeriCredit. The new unit, to be renamed General Motors Financial, will allow GM to offer consumers more financing and leasing options.

Three months after turning in its first profit since bankruptcy, GM is expected to report even bigger profits during the second quarter when it releases its latest results on Thursday.

Getting out of subprime mortgage lending makes economic sense for banking giant Wells Fargo. But its questionable record of lending practices in black and Hispanic communities is another good reason to quit the business.

Despite getting an additional $3.8 billion last week in federal aid and a year-end rebound in car sales, GMAC still expects to post a $5 billion loss for fourth quarter 2009. Most of it stems from write-downs in residential real estate.