Wells Fargo and the NAACP have agreed to work together on ways to improve fair credit access, homeownership, and financial literacy for communities of color and other historically disadvantaged communities, the two said in a joint statement.
Over the past three years, the civil rights organization has filed lawsuits against more than 12 large financial institutions, — including HSBC Bank USA, Bear Stearns Residential Mortgage Corp., Chase Bank USA, Citimortgage, and GMAC Mortgage Group L.L.C. — alleging violations of the Fair Housing and Equal Credit Opportunity Acts and racial discrimination.
“We brought these lawsuits against lenders to change and stop patterns of racial discrimination and other mortgage lending behaviors that have shattered American lives, families, and neighborhoods,” said NAACP President and CEO Benjamin Todd Jealous.
The lawsuit, which was filed in March 2009 and also included HSBC Bank USA, had claimed that black borrowers at Wells Fargo were more than 30% more likely to be issued a higher rate mortgage than white applicants with the same qualifications.
At the time, Wells Fargo said the “allegations are totally unfounded and reckless.”
The NAACP will now be able to review Wells Fargo’s data on lending practices and to make recommendations to improve credit availability to African Americans, businesses, and consumers.
Wells Fargo has now endorsed the NAACP’s banking and lending principles, “which advance practices that ensure all borrowers get the highest quality credit vehicle appropriate for their circumstances and that guard against racial discrimination in lending,” according to their joint press release.
The bank, which is the fourth-largest in the U.S. in terms of deposits, said the agreement is “the next constructive step forward in realizing our vision of helping all of our customers to further business ownership and promote financial empowerment.”
However, the bank still faces criticism from the National People’s Action, which claims that Wells Fargo contributed to the current economic and foreclosure crisis because it issued $27 billion in subprime loans in 2006 alone.