The announcement on July 12 that Wells Fargo had agreed to a $175 million dollar settlement to avoid prosecution by the U.S. Justice Department for race bias in its lending policies follows a settlement with Bank of America Corp. last December to pay $335 million to avoid similar charges. Unfortunately, this amount is just a wee drop in the bucket when compared with the destruction these financial institutions’ policies have wreaked in the lives of Latino and Black families. Thanks to the exploitative lending policies they’ve been much harder hit by our harsh economic climate specifically because housing has cost them hundreds more each month than White families paid, even when the Black and Latino borrowers had equally good jobs and purchased properties valued at the same price.
The Root tells this story well,
The DOJ compiled extensive interviews with Wells Fargo employees that describe a company culture in which brokers were encouraged to offer minorities loans at higher rates that they knew they could not afford. The credit crunch subsequently led to widespread defaults and foreclosures in African-American and Latino communities, drawing light to the disparities. A November 2011 report (pdf) by the Center for Responsible Lending found that from 2004 to 2008, 25 percent of all black and Latino borrowers lost their homes or were seriously delinquent, compared with 12 percent of whites.
The Black Middle Class Under Attack
In the case against Wells Fargo, Baltimore officials argued that because many of the mortgages were essentially designed to fail — fail they did. As the national economy contracted and people lost jobs, the inflated costs of their housing became unbearable. When families were forced out of their homes, the communities experienced a domino effect. In inner-city Baltimore, the increased number of vacant homes sent property-tax revenues plummeting, reducing home values exponentially and increasing the costs of public services, like police and firefighters.
The result? The city — now reeling from budget woes — was forced to cut public workers, firing police officers and closing fire stations, further exacerbating the community’s problems and helping to destroy its African-American middle class.
This pattern has been replicated across America and contributes to the disproportionately high unemployment rate of 14.4 percent for blacks and 11 percent for Latinos, while white Americans continue to experience an unemployment rate of 7.4 percent — nearly a full percentage point less than the national average. But the damage — which is systemic and now affects access to future credit because of lower credit scores — will have a negative impact on generations of African Americans in the same way that slavery, legalized discrimination and the war on drugs continue to plague our communities.
Also see
http://articles.latimes.com/2012/jul/13/business/la-fi-wells-bias-settlement-20120713
NJ shares in historic $25 billion fed-state mortgage fraud settlement
It’s disappointing that the national Hispanic Chamber of Commerce would
allow Wells Fargo to be the convention chair in Los Angeles for their
33rd annual national convention. It is shameful where Wells Fargo has agreed to pay $175M settlement to avoid prosecution by the justice department, where Black & Latino borrowers were victims of mortgage/red-lining. Since Wells Fargo was most likely picked last year as the corporate convention chair I would like to see the national Hispanic Chamber mandate Wells Fargo to donate funds to the local Hispanic Chambers of Commerce so we can educate the Latino community on how to obtain mortgages through Wells Fargo. I believe that we could give Wells Fargo a second chance to provide mortgage loans to the Latino community.
So true, John. Orgs must leverage the power of their ethnic minority constituencies to pressure big money into doing right 4 the people #p2