NAACP Sponsor Wells Fargo Being Sued by Justice Department for Discriminatory Lending

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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.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and founder of the Your Black World Coalition.  To have Dr. Boyce commentary delivered to your email, please click here. 

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36 Comments

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36 responses to “NAACP Sponsor Wells Fargo Being Sued by Justice Department for Discriminatory Lending

  1. Pingback: NAACP Sponsor Wells Fargo Being Sued by Justice Department for Discriminatory Lending « Black News for Black America

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  10. SapphiresMomma

    Dr. Watkins,

    Your commentary is right on the money!

    These are the types of information we need to be hearing/reading about and up for discussion so those that were affected can learn something and not make the same mistakes again.

  11. Good Story Dr. Watkins,

    Time for President Obama to stop playing the “Race Card” in terms of the housing crisis. The banks have hurt EVERYBODY and not just poor blacks. Presidnet Obama aka Eric Holder is hurting himself in a HUGE way by going after Wells Fargo Bank in the defense of ONLY black homeowners. As a white person fighting foreclosure it adds to the indignation and makes me resentful of President Obama who has made all of the wrong decisions regarding foreclosure and the housing crisis. Remember it was President Obama who started HAMP which failed miserably because the President failed to place the BLAME on the Banksters who causerd the problems of the Housing Bust, Economic Recession, and job /income losses resulting in mass foreclosures. Instead, President Obama gave the Big Banks authoritiy to make the modification rules and millions of Americans (including myself) rejected this insulting gesture. If the whites start believing that President Obama only fights for poor blacks and not poor whites, he will certainly lose the next election

  12. Roderick Johnson

    Ineed info on how to get my sister help with a home mortgage she has with wells fargo there actions have caused her grave hardship to wit she has yet to recover . i need to know were to start with little or no money .But i need to know what she’s intittled to under the color of law. hope to hear from you soon don’t want to make the wrong turn or have no were to turn Thank You for your help.

  13. For the love of money, the NAACP may as well go ahead & slide between the sheets wit Wellsfargo. Wellsfargo owes Me thousands, so let the chips fall where they may!

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  22. linn

    Wells Fargo
    to long they have been taking the minority for granted by charging us a high intrest rate, and the said part about this even if you call these so call agency. 1 ESOP, NACA, and even the ones in the neighborhood. They are not for the consumer they are for the big coproate companies, and they will not give us any mercy? So, this was a long time coming.

  23. thomas slater

    i was discrimanated against by wells fargo , i was desperarte, so that refinance my home loan which was with capital one at intersted rate of 6. and that gave me a rate of 9.6 and and at tha time my credit was excellent. my rate is still 9.6. what can i do about this.

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  30. Ellen Casey

    Please email me infortmation regards of wells fargo being sued.

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