Wells Fargo Shareholders, Customers Protest Racial Disparities in Lending

Press Release from Responsible Wealth and ACORN
For Immediate Release: Dec. 12, 2005
Contact: Betsy Leondar-Wright, UFE
(617) 423-2148 x113
Jordan Ash, ACORN, 651-503-4555

The Grinch Who Stole Christmas: Wells Fargo Shareholders and Customers Protest Racial Disparities in Lending

On Wednesday December 14 at 12 noon, outside Wells Fargo headquarters at 465 California Street in San Francisco, shareholders and customers of the bank, along with community groups, will hold a picket over Wells Fargo's predatory lending practices and payday loans.

The "Wells Fargo Wagon," driven by CEO "KovaceGrinch," will play Santa in reverse by taking gifts from low-income borrowers and delivering them to the bank's front door, to symbolize the losses from predatory loans, in particular in communities of color. (Click here to see flyer for the event)

ACORN (Association of Community Organizations for Reform Now) launched a national campaign to pressure Wells for reforms in 2003. Responsible Wealth and Community Reinvestment Association of North Carolina (CRA-NC) have been in negotiations with Wells Fargo since February. As a result, the company has changed certain lending policies, such as reducing prepayment penalties and eliminating mandatory arbitration. But Wells has yet to compensate customers who suffered from previous abuses, as other leading lenders have done.

"We are glad that Wells Fargo has finally acknowledged the damage that their practices have been causing and has agreed to change some of them," said Maude Hurd, ACORN's national president. "However, Wells still needs to compensate the families and communities its predatory lending has hurt, and to address the serious racial inequality in its lending."

Wells Fargo shareholders who are members of Responsible Wealth filed a resolution in November calling on the company to explain racial disparities in the cost of their loans and their relationship to the overall racial wealth divide in the United States.

Theo Ferguson of Berkeley, CA, a Wells shareholder and a member of Responsible Wealth, will speak at the protest. "If Wells Fargo would create a committee of all stakeholders to investigate the allegations of predatory lending practices and put an end to them, as a shareholder I would spread the word to celebrate their leadership."

Some Responsible Wealth members have also co-filed a resolution offered by CRA-NC. The resolution asks Wells Fargo to stop funding pay day lenders. The resolutions will appear in the 2006 proxy and will be voted on at the 2006 shareholder meeting.

Peter Skillern, Executive Director of CRA-NC and a Wells shareholder, said, "When people pay for Christmas with a payday loan, they're going to have a New Year's hangover. And Wells Fargo doesn't need to fund the debt party."

Of Wells Fargo's conventional first-lien mortgages in 2004, high-cost loans made up 29.5% of the loans to African-Americans, 12.6% of the loans to Latinos, and 7.6% of the loans to whites. African-Americans were 3.9 times and Latinos were 1.7 times more likely than whites to receive a high-cost loan.

In April, New York Attorney General Eliot Spitzer asked Wells Fargo and three other large banks for information on loan conditions and credit scores as he investigated whether the racial disparities in high cost loans violated state laws. According to Spitzer, Wells Fargo's African American customers in New York were three times more likely than whites to receive high cost loans; at JP Morgan Chase and Citigroup, the disparity was 2-to-1, and at HSBC, 1.5-to-1. Rather than comply with Spitizer's request, Wells Fargo joined others in successfully suing the Attorney General, arguing that he had no jurisdiction over a federally chartered bank.

Barry Hermanson of San Francisco, Wells Fargo customer and member of Responsible Wealth, will speak at the protest. "Wells Fargo is not alone among banks with large, unexplained racial disparities in their lending. As a customer, I expect Wells Fargo to act as the fair housing leader they've told me they are."

Predatory loans are those with unreasonable interest rates and fees not warranted by credit rating, or with deceptive clauses that penalize less informed borrowers. Payday loans are short-term loans that borrowers promise to repay out of their next paycheck or deposit, often with very high interest rates or fees and multiple loan renewals.

Responsible Wealth, a project of United for a Fair Economy (UFE), is a membership group of affluent Americans who advocate shared prosperity. ACORN is a national grassroots membership organization of over 175,000 low and moderate income families who have joined together to have a greater voice in the decisions, structures, and policies that affect them.