This Saturday, September 17th, all Wachovia signs will make the symbolic transformation into Wells Fargo signs. You may ask yourself, why should I care about this, after all, a bank is a just bank. Wrong.
Wells Fargo is not just any bank. Wells Fargo has a special relationship with Baltimore, and it’s not pretty.
Several years ago, the city of Baltimore filed a lawsuit against Wells Fargo for discriminatory lending practices and “reverse redlining.” However, Baltimore is not alone. Memphis has also filed a lawsuit, and the Federal government is investigating Wells Fargo for improper actions.
The housing crisis has been particularly devastating to Baltimore. Abandoned houses on many corners foster a sense of hopelessness and despair. While Wells Fargo is not the only bad actor in this equation, they did play a prominent roll in promoting bad loans, especially to minorities in Baltimore.
Legal documents are difficult to read. Racial slurs, systematic deception on loans, and discrimination are just some of the things former employees discuss in these documents.
Now Wells Fargo wants to waltz into the city like nothing has happened. We offer 10 reasons why Baltimore should not roll out the welcome wagon for Wells Fargo.
To read the full document with citations, click here:
1. Racist lending practices: According to legal documents, Wells Fargo loan officers referred to African-American customers as “mud people,” and to the subprime loans they sold them as “ghetto loans.”
2. Discrimination: Wells Fargo offered subprime loans to 47% of African-American borrowers compared to just 10% of white borrowers.
3. High interest loans: Wells Fargo may bring a new type of payday loan to Maryland. When calculated annually, these direct deposit loans carry as much as a 365% interest rate.
4. Say goodbye to free checking: While local banks like M&T and PNC still have free checking with no minimum balance, Wells Fargo may penalize customers for lower balances.
5. High profile lawsuits and investigations: While the United States Department of Justice is investigating Wells Fargo, the city of Memphis and the city of Baltimore have filed lawsuits against the bank for discriminatory lending practices.
6. They are like Countrywide: Wells Fargo offered subprime loans at a rate of 26%. This is almost the same rate as notorious Countrywide — the poster child for the housing market collapse. From 2005 through 2009, Countrywide’s subprime lending rate was 31%.
7. Taking advantage of under-served communities: Wells Fargo saw Baltimore as an easy target for discriminatory lending. Minorities in the city — typically denied access to credit and subjected to years of racially segregated living patterns — were susceptible to predatory lending.
8. Predatory lending: In a 2004 report, the Center for Responsible Lending found that Wells Fargo charged excessive fees and interest rates regardless of credit history; tricked borrowers into adjustable rate loans; and convinced people to refinance loans at rates beneficial to Wells Fargo.
9. Vacant properties drain resources: A report released in June 2009 estimated that the annual cost per block for police and fire services increased $1,472 for every vacant property on that block. Baltimore has nearly 30,000 abandoned properties — 16,000 structures and 14,000 lots.
10. Risky student loans: Wells Fargo is one of few banks in the United States to offer fixed-rate private student loans. These loans can be more expensive than federal student loans and interests rate vary — 7.75% to 14.25% — depending upon credit history. And unlike federal loans, deferments are given at the sole discretion of the bank.
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