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Department of Justice Targets Wells Fargo For Discriminatory Lending

Department of Justice Targets Wells Fargo For Discriminatory Lending

 

On the heels of a report by the Federal Reserve that Wells Fargo may have illegally steered more than 10,000 borrowers into more expensive subprime mortgages or falsified loan documents comes news that the Civil Rights division of the Department of Justice is about to sue the banking giant for discrimination based on those shady business practices.

Wells Fargo already agreed to pay $85 million to settle the civil charges stemming from the Federal Reserve investigation. Now it must face Attorney General Eric Holder’s office.

The allegations came to the surface thanks to a lawsuit filed by the city of Baltimore. In that case Wells Fargo is accused of targeting African-American borrowers and majority-black neighborhoods in a practice known in the industry as “reverse redlining”. Baltimore claims Wells Fargo targeted these borrowers knowing they’d ultimately default on their loans but did not worry about carrying any risk associated with default because those loans were to be sold to investors.

When the Federal Reserve allegations are pieced together with those from the Department of Justice what emerges is a picture of an institution that profited from knowingly targeting less-sophisticated borrowers and preying on communities that traditionally lacked access to a full range of consumer credit products.

The Wells Fargo suit is one of 60 open predatory lending investigation, a dramatic uptick from the days of the Bush administration where the Civil Rights division of DOJ barely had a pulse. And while plenty of work remains in cleaning up the foreclosure mess and holding the various criminals accountable, this latest move by the Department of Justice is certainly a step in the right direction.

Related Stories:

Countrywide Pays $108 Million to Settle Mortgage Fraud Claims

Bank of America Gets Foreclosed

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Photo from MoneyBlogNewz via flickr.

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23 comments

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2:38AM PDT on Jul 29, 2011

I agree Craig and, credit unions are good places to put your money and their loan policies are far less restrictive. They actually want people who have gone through a bankruptcy (like a friend of mine) to get on their feet. My son belongs to a particular credit union and when I told my friend about it, she closed out her bank account with another bank and is very pleased with that change.
We have to remember, W.F., Bank of America, Chase, etc., have one agenda and that is to profit greatly from your banking with them. They have absolutely no interest in your welfare at all and will metaphorically slit your throat if it is advantageous for them to do so. Think of 'emotional investment' because if you get screwed by the banking institution you are with now, you will become very emotional, to put it mildly. Why not save yourself the headache now and dump the bastards!

9:00PM PDT on Jul 28, 2011

Put your money in small regional banks.

7:00PM PDT on Jul 28, 2011

MoveOn.Org is one of the grassroots organizations aiming for W.F. and Chase Banks. Anyone having problems with either of these corporations, write to your politicians and contact MoveOn.Org and any other group going after the bastards!

6:57PM PDT on Jul 28, 2011

I despise Wells Fargo and this banking institution is corruption personafied! I hope they get their just reward and there is a great deal of activity here in Denver with protests and signs aimed at Chase and W.F.

4:58PM PDT on Jul 28, 2011

Bought Wachovia too soon?

4:03PM PDT on Jul 28, 2011

Where are you people getting your facts from, the press again. Whites are a minority at this present time and have been for a while.

2:34PM PDT on Jul 28, 2011

Okay. Since there are other rants against this dreadful company, I might as well add my own. Back in the first decline of the housing boom, I had two homes for sale -- both mortgages held by WF. The market was crashing but I had two buyers (one with CASH) for these houses. What did WF DO? Nothing. They didn't answer the offers, they didn't return our calls, they didn't respond over a SIX month period of putting in offers! Instead, they held out until I couldn't pay for the homes anymore, then foreclosed! One of my buyers contacted me later and said he'd bought one of the houses from the foreclosure auction for LESS than he'd offered ME!! Great business practices, HUH! Hope they all ROT!!

1:20PM PDT on Jul 28, 2011

After my own personal experience with a Wells Fargo Bank, I would NEVER bank with them. In 2003 I was rear-ended by a city bus. The bus company sent me a check to cover the damages to my vehicle. It was drawn on Wells Fargo and made out to myself and my lawyer. My lawyer signed the check, then sent it to me. As my bank was about 20 minutes away by car, I decided to go to the Wells Fargo branch that was less than five minutes away from my home and cash the check. Wells Fargo refused to cash the check as I did not have an account. I pointed out that it was drawn on their bank, still no dice. Then they gave the excuse that it had been pre-signed by someone else and they couldn't be sure that the signature wasn't a forgery. However, if I opened an account with them, it wouldn't be a problem. After arguing with the bank manager for about 15 minutes, I finally decided to just go ahead and go to my bank. When I got there, I was telling the teller my experience at Wells Fargo. They told me that it was ridiculous and that if someone had brought in a check drawn on their bank, they would have cashed it no questions asked.

1:03PM PDT on Jul 28, 2011

It's about time the greedy banks and financial companies be held accountable for their actions and pay the price.

12:43PM PDT on Jul 28, 2011

I'm not surprised since Wells Fargo has a long established track record of underhanded dealings and dirty doings and treating its customers like rubbish. They are yet another defintion of corporate and financial industry evil.

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