Accusations of predatory lending at Wells Fargo are making news once again. African Americans paid $137 million more to Wells Fargo & Co. than white borrowers, according to a report released today by the National People’s Action (NPA), a grassroots network of organizations hoping to achieve more equity in housing, work, health, education, finance.
“The numbers speak for themselves,” said George Goehl, the NPA’s executive director, of the report that examines Wells Fargo’s lending record between 2004 and 2007. “The fact that a bank with clear disparities in its lending practices can receive $25 billion in federal bank bailout money raises real questions about racial justice in this country,” he added.
African American borrowers at Wells Fargo received high-cost loans that were more expensive than the high-cost loans received by white borrowers, according to the report, “The Truth About Wells Fargo: Irresponsible Lending and African Americans.”
The NPA, a project of the National Training and Information Center, claims that Wells Fargo contributed to the current economic and foreclosure crisis because it issued $27 billion in subprime loans in 2006 alone.
Key findings in the report include:
–More than 37% of all loans made by Wells Fargo to African American borrowers were high-cost loans, compared with 12% of loans received by white borrowers.
–Forty-five percent of all refinance loans received by African American borrowers were high cost, compared with 19% for white borrowers.
–For low- and moderate-income borrowers, 48% of all Wells Fargo loans to African Americans were high-cost loans as compared with 20% of the loans for equivalent white borrowers.
To correct this “despicable” manner of “predatory and discriminating” business, the NPA has a list of recommendations for Wells Fargo. The organization wants the bank to develop a program, with clear goals and strategies, to end racial disparities in its lending programs; provide information that allows for monitoring and measurement of the bank’s ability to achieve racial parity in its lending practices; and support the expansion and strengthening of the Community Reinvestment Act to ensure banks are reinvesting in communities that serve minorities and those with low and moderate incomes.
Separately, last week the NAACP filed a lawsuit against Wells Fargo and New York-based HSBC last week accusing the two banks of practicing predatory and discriminatory lending. Wells Fargo has denied the accusation, saying that it is proud of its “lengthy record leading the industry in responsible lending practices.”