A Doper recently mentioned that Wells Fargo has taken some heat from the NAACP due to blatant and widespread systemic racist practices. From looking around online, it appears that this is all related to sub-prime lending practices that led to the housing market crisis. Judging by affidavits obtained in September, this was an entirely conscious targeting of financially solvent blacks for sub-prime loans even though they would have qualified for better ones. Blacks were allegedly referred to as ‘‘mud people’’ and the sub-prime loans as ‘‘ghetto loans.’’
Thing is, Wells Fargo is my bank, and I just got wind of this. If these allegations are true, I feel ethically compelled to close my accounts. Because closing all my accounts and changing banks would be rather inconvenient, I just want to make sure the NAACP has a pretty solid case.
The most recent online article I can find on this matter is dated September 2009, nearly one year ago, and it involved the affidavits but apparently no ruling. Does anyone else have more recent information on this? Did the court find merit in these claims? I suppose this last is entirely a matter of personal opinion, but is there sufficient evidence to condemn Wells Fargo?
Thanks,
Christy
When I was working there, about a third of the employees were black, including many of the higher-ups. Mortgage department has almost nothing to do with the banking division.
Keep in mind in any discussion on this topic that ten years ago, all the banks were being condemned for not making loans in black neighborhoods (so-called “redlining”).
The NAACP and Wells Fargo reached a settlement in April this year:
http://www.msnbc.msn.com/id/36275355/ns/business-mortgage_mess/
NAACP dropped lawsuit and gets no monetary settlement. Wells Fargo will allow NAACP to review lending practices.
Not entirely sure of the relevance. I would hope that the pendulum on fair lending doesn’t just swing from rejecting based on race to pricing loans more expensively based on race.
What obfusciatrist said. Redlining was a devastating practice that perpetuated racial inequality at a crucial time in our nation’s history, and those effects are still seen today in urban decay as well as the disproportionate poverty rates between whites and minorities. Sub-prime lending based on race rather than financial solvency is really the ethical equivalent* of redlining in today’s society. Either situation involves unequal treatment based on race, and if these allegations are true, it means Wells Fargo actively took part in the perpetuation of racial inequality on a pretty enormous scale.
(*Just my opinion, obviously, and one that motivated this post.)
I’m trying to decide if having the NAACP review their lending practices is good enough for me. Thanks for the info.
Wells Fargo, perhaps interestingly, was also a major sponsor of the NAACP’s annual convention in July 2010 (pdf).
I think if you look at any large corporation in America, you will find some bad apples. Yes, right now somewhere at Microsoft, there is probably a child molester no one knows about, dozens of adulterers, hundreds that cheat on their taxes, etc.
So, should you boycott Microsoft products because of this? I don’t think so. And if an unwritten business practice ends up being illegal and immoral, but makes the company money, don’t be surprised if elements of the company do it until they get caught, especially if they were financially motivated to do so. Is the whole corporation evil and should you pull your accounts? I don’t think so.
I’ve seen plenty of illegal/immoral business practices in the defense contracting industry, some of which was ridiculous, but I never held the individuals in other divisions responsible, any more so than I would hold an Afghani living in this country responsible for deaths of our soldiers in Afghanistan due to insurgent attacks.
My first question in a case like this is whether the people involved are still there.
Companies are neither bad nor good. Those concepts only apply to the people within the company. If a group of employees (including management) does bad things and they are removed from the company, I see no need to boycott the business and hurt all of the other people who still work there.
Keep in mind that WFB is a San Francisco-based bank (it has been bought twice, in both cases the buyer changed ITS name to “Wells Fargo”) and the 1990’s were full of banks gobbling up each other - the “ghetto loans” were made by somebody in MD - who knows who the guilty party was before the feeding frenzy among banks - I worked (IT) on a merger (when WFB bought FIB) - the big difference the FIB’ers saw was there top brass were gone, and any branch too close to an existing WFB branch was toast. Otherwise, all that changed was the format of various data feeds (and the IT staff which supported them). The business types at surviving locations were left to their own - the brass in SF did not review every marketing plan.