by Dr. Boyce Watkins, Syracuse University – Scholarship in Action
The United States Justice Department is preparing to launch an investigation against Wells Fargo, a company that serves as the largest home mortgage lender in the country. The company is being accused of taking advantage of minority consumers by selling them loans that were overpriced and more likely to lead to default.
Wells Fargo is not only the fourth-largest bank in the United States, it is also a key sponsor of the annual NAACP Convention. The organization took criticism last year when they dropped a discrimination lawsuit against the company shortly before announcing that they were set to receive money from the bank.
Similar discrimination lawsuits have been filed against Wells Fargo in the past, the most recent being a case against the company filed by the city of Baltimore. The Justice Department alleges that over 10,000 borrowers were affected by the deceptive lending schemes of Wells Fargo and that their documents were falsified by bank personnel. Wells Fargo has thus far paid $85 million to settle the charges, without admitting wrong-doing.
The company has been accused of an activity called “Reverse redlining,” where black borrowers were targeted for subprime loans. The company would push these loans toward black consumers, but didn’t’ worry about the higher default probability because they would immediately sell the loan to investors.
“We have a very strong commitment to serving all customers along the credit spectrum, and we do so without bias,” said Vickee Adams, a spokeswoman for Wells Fargo. “That’s the type of responsible lending that we practice.” Adams declined to comment on the Justice probe.
Earlier this year, I spoke with NAACP President Ben Jealous about the relationship between the NAACP and Wells Fargo. Jealous seems to argue that the relationship is one in which the NAACP is positioned to monitor the behavior of the bank, as well as suggest more appropriate ways of doing business. His words seemed credible and one hopes that the NAACP is using the money to further it’s pursuit of social justice (their recent campaigns related to mass incarceration and voter rights have been quite effective).
At the same time, we have to remember that the NAACP is an organization that has been accused in the past of accepting money from any corrupt corporation willing to cough up the cash, leading many to call for greater transparency in these potentially shady relationships. We must remember that giving to the NAACP is not always the same as giving to the black community, and Wells Fargo likely understands that granting a few million dollars to the NAACP is a nice tradeoff for the billions in lost wealth they may have stolen from the black community at large. The cheapest form of restitution for a massive crime is to pay the police officer to look the other way.
One cannot accurately speculate on the relationship between the NAACP and Wells Fargo. But at the very least, the relationship should be one that is clear to everyone affected, and that includes each of us in the black community. It’s entirely appropriate to monitor our leaders to ensure that they are serving the collective interest and not their own. Money can be a powerful drug.