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Wells Fargo to Pay $175 Million for Racial Discrimination

Wells Fargo to Pay $175 Million for Racial Discrimination

The Justice Department announced on Thursday that Wells Fargo was guilty of racial discrimination in its mortgage and lending policies between 2004 and 2009. The investigation revealed that mortgage brokers charged more to minority borrowers than white borrowers with the same lending risk. Brokers were also guilty of lending riskier subprime mortgages to minorities since 2004, the New York Times reports.

The bank giant has agreed to pay out a $175 million settlement. A majority of that money will go towards recompensating borrowers while about $50 million will be used to improve communities and housing in various neigborhoods.

A number of metropolitan areas will benefit from the settlement, including Chicago, Baltimore, Los Angeles, Oakland and New York.

The most unsettling aspect of the entire investigation and settlement is that Wells Fargo has not admitted fault. Instead, a representative quoted by Reuters stated that the settlement was:

…solely for the purpose of avoiding contested litigation with the DOJ, and to instead devote its resources to continuing to provide fair credit services and choices to eligible consumers, and important and meaningful assistance to borrowers in distressed U.S. real estate markets.

The lending giant maintains an official innocence while brushing over the nitty-gritty issues with their faulty lending practices, which led to massive defaults and misery for thousands of homeowners in communities across the U.S. Officials claim that it is a waste of time to mull over the details of the legal investigation, which could slow down the continued loaning practices of the company.

Wells Fargo has already had to pay settlement fees in Memphis and Shelby County in Tennessee during the month of May. That settlement came out to about $7.5 million and the bank agreed to lend about $425 million to borrowers in the area over the next five years, Wall St. Cheat Sheet reports.

The Tennessee case was particularly pertinent because 43 percent of the foreclosures in the area were in black neigborhoods, another symptom of the corrupt and slanted lending policies of the monetary giant.

The original lawsuit against Wells Fargo began back in 2009 when the Office of the Comptroller of Currency noticed a lending pattern developing in the Baltimore area. Over the course of the investigation, the Department of Justice continued to widen the scope of the investigation to include metropolitan areas across the country, the New York Times reports.

The $175 million settlement still needs to be approved by a judge in the coming days, Reuters reports. The newsagency quotes Deputy Attorney General James Cole regarding this settlement and the discrimination of the lending bully stating:

An applicant’s creditworthiness, and not the color of his or her skin, should determine what borrowers pay and what loans they qualify for… Put simply, there is no place for discriminatory lending in the marketplace, and it will not be tolerated.

Related Stories:

City of Berkeley Plans to Pull $300M Out of Wells Fargo

750 Activists Occupy Wells Fargo Branch in D.C.

Protests Target Wells Fargo Shareholders Meeting

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Photo Credit: Wikimedia Commons

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21 comments

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9:21AM PDT on Jul 16, 2012

How many of you would be willing to pay the same percentage of income they did if they would let us go in and beat the stupid off these crooks? I will pitch in a nickle.

There are THOUSANDS that should be in prison (GENERAL lock up) with lots of Bubbas doing at LEAST 20 years. Those 20 years should come with a new kind of FINE, the kind that takes EVERYTHING they own, money and property and gives it back to the people they robbed.

I want to see men called Bubba going on TV thanking us for their new boy toys. I want to see Bankers, including the FED Reserve and investors SOOOO afraid of us that they BEG to have the Glass Steagal Act put back into place. I want them so afraid of us they never steal another dime or make MORE than 40% more than their lowest paid worker.

7:00AM PDT on Jul 16, 2012

Disgusting. $175 million is peanuts - nothing - nada to a multi-billion dollar corporation like Wells Fargo. I'm so glad I left them last year but I'm under no illusion that it made a whit of difference to the corporation itself. Nor does this judgment.

Now take into account all the lives Wells Fargo has devastated. THOSE were not peanuts - nothing - nada. Those are real live people who were really, seriously harmed.

This is not justice. This is a joke. A sad, sad joke.

4:18AM PDT on Jul 15, 2012

Very good! they stole 90 dollars from me. They are thieves.

7:04PM PDT on Jul 14, 2012

Usually when I read about some evil company paying a big fine, it doesn't say who gets the money. I'm glad this one did, and I hope it really goes to the people and community it says it will.

6:45PM PDT on Jul 14, 2012

Bankers these days are enjoying popularity ratings just slightly above that of serial killers and Members of the House of Representatives. I wonder why?

4:57PM PDT on Jul 14, 2012

Considering that ATM fees alone generated $7.1 billion in revenue last year, a paltry $175,000,000 penalty hardly seems meaningful.

That would seem darn near akin to having a $1 fine for armed robbery.

4:40PM PDT on Jul 14, 2012

The deals the DOJ is making with these banks and others involved is just plain wrong. Let the people take them to court and when we are though with them there should be only a shadow of the size they were.

4:25PM PDT on Jul 14, 2012

A fine, are you serious???? They should be in prison. Why the hell are they being charged their lunch money when anyone of US would be in prison and I don't mean some white collar spa either. They SHOULD be in PRISON for at least 20 years.

3:32PM PDT on Jul 14, 2012

Only $175 million? That's not nearly enough to punish this bank for what they have done. They're just as bad, if not worse than Bank of America.

9:16AM PDT on Jul 14, 2012

@Angela D - it's getting hard to keep track of all WF's misdeeds. Do a search on "Wells Fargo illegal foreclosures" and look at the stuff that turns up.
Here's a quick guide to some of the reasons not to like this company.:
http://massuniting.org/2012/03/19/wellsfargo/

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