Wells Fargo’s Alleged Cheat of the Black Community

12 Jun

by Dr. Boyce Watkins

www.BoyceWatkins.com

Tavis Smiley needs to have a conversation with one of his primary sponsors, Wells Fargo. This week, it was announced that Wells Fargo is being sued by the city of Baltimore for egregiously racist predatory lending practices in the black community. The company has been accused by some former loan officers of targeting subprime, low quality loans to black neighborhoods, leading to a dramatic economic collapse for the black community of Baltimore.

The statistical evidence is daunting. Half of all the properties foreclosed by Wells Fargo are vacant and 71% of those properties are in black neighborhoods. Wells Fargo’s African American borrowers with incomes greater than $68,000 per year were 8 times more likely to hold subprime loans than white borrowers with the same income.

Dr. Christopher Richardson, one of the world’s leading experts on predatory banking, states that, “There are virtually no federal laws prohibiting predatory lending like those that prohibit explicit discriminatory pricing or redlining.” Richardson, who is a former fair lending economist with the Justice Department, goes on to state that, “They essentially have two different banks – a prime bank (for lower-risk borrowers with low default rates) and a subprime bank (for higher-risk borrowers). They market the subprime bank in minority neighborhoods, and the prime bank in non-minority ones. The advertising might be misleading, too, so as to make the subprime customers think they’re working with the prime bank (“Wells Fargo Financial” vs. “Wells Fargo Home Mortgage” sound pretty similar, for example). So, if everyone in the prime bank is treated equally regardless of race, and likewise for everyone in the subprime bank, then the bank as a whole will look like it’s not breaking the law.”

To read more of Dr. Richardson’s comments in detail, please click here.

There is a deeper and more serious concern with the stunning accusations being thrust against Wells Fargo, and this involves Tavis Smiley.

Wells Fargo is one of the primary sponsors of the State of the Black Union conference held annually by Mr. Smiley. The State of the Black Union is a respected event, in which scholars and leaders in the black community get together to discuss policy for African Americans. There is an element of trust granted to the forum that the speakers will provide recommendations for consumer choices that are ultimately healthy for the black community.

One can remember a scene in the movie, “American Gangster”, where the drug dealer Frank Lucas gave away turkeys and Christmas presents to justify the fact that he was simulteanously working to get the neighborhood addicted to heroine. Should the accusations against Wells Fargo have merit (which may be the case, since many organizations and governments around the nation are suing them for similar practices), then one must wonder if there is a secondary agenda in their decision to sponsor the State of the Black Union so heavily. Do they feel that a payoff to Tavis Smiley will help them persuade African Americans to come into their banks for predatory loans? Should Smiley take such funding without there being an appearance of impropriety? In order to maximize profits, you can see how Wells Fargo could stand to give a few thousand dollars to a leading black conference if that were to lead to millions in additional banking fees.

Click to read the rest of this article on AOL Black Voices

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24 Responses to “Wells Fargo’s Alleged Cheat of the Black Community”

  1. DM Pantheons June 12, 2009 at 3:41 pm #

    This ia just the tip of the ice berg. This isssue is more complicated than most know. Here are a few leverage points to look for:

    1. Favoritism in underwritingcies exercised in some zip codes and not in others. Meaning, they would make lending exceptions of 5% LTV or more but would turn down or restrict equity positions for many minority applicants with good credit and income.

    2. Striking deals with appraisers to get the value they need to get the loan.

    3. Using online evaluations that they knew were incorrect.

  2. Anonymous August 15, 2009 at 8:51 pm #

    I am also a victum of Wells Fargo Outragious lending policies.
    I have a credit score of 746 yet Wells Fargo is charging me a
    whooping 11.45% interest rate (finance charge) on a $8,000.00
    auto loan. Out of the $198.18 monthly payments I pay, Wells fargo
    collects $71.42. The car (a 1993 ford) is only worth $6,000.00 in
    good shape. I have six years to pay it off at which time i will have paid over $13,000.00 for the car. They have me in what is know as an over and under situation. It’s just not fair I started paying in 2007 and to this date i’ve paid $4,756.00 Since i have full coverage I am almost incourage to have the car stolen and getting out of rip off. Then ontop of all that the goverment gives them billions of tax payers money. It is so unfair.

  3. Anonymous July 12, 2012 at 11:38 pm #

    they need to look in the state of Virginia with wells fargo car loans. i pay 840.00 on a 2005 car. i can be paying for two cars. and i am still paying for that car.

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