Charges of premeditated racist discrimination by the nation’s top banks were given additional boost by the city of Baltimore which filed affidavits recently in a suit against Well Fargo for steering minorities to purchase sub-prime loans. Similar suits have been filed in several states including Texas, Tennessee and California and by the NAACP alleging racial bias in predatory lending. The Baltimore case was initially presented last January. The complaint runs some 825 pages.
Lending credence to the Baltimore suit is the testimony of Elizabeth Jacobson, who was one of Wells Fargo’s top loan officers. Jacobson in court papers filed last week said, African American individuals and institutions were singled out for special targeting. ‘Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.’
According to the Baltimore Sun, Tony Paschal, another loan officer, the bank used African Americans as fronts for these practices, even ‘using software to translate marketing materials into various languages, including something called ‘African American.’
Paschal contends that racist language was frequently used with sub-primes called ‘ghetto loans’ and its recipients ‘mud people.’ According to a 2008 study by United for a Fair Economy, such practices were widespread for over a decade – the loans jokingingly referred to in the finance industry as NINJA loans (no income, no jobs, no assets.) Jacobson described the practices as a ten year long ‘stage coach ride to hell.’
Fargo has denied the charges alleging the city of Baltimore is ‘thirsty for revenue,’ as reported by the Baltimore Sun.
Paschal agrees that special banking units were setup to direct marketing at Black communities. According to the New York Times. ‘In 2001, he states in his affidavit, Wells Fargo created a unit in the mid-Atlantic region to push expensive refinancing loans on black customers, particularly those living in Baltimore, southeast Washington and Prince George’s County, Md.’
In addition to steerage, the Wells Fargo employees cites example after example of loan officers deliberately directing customers to sub-primes even when their credit scores qualified them for prime loans. Fraudulent practices they claim were widespread including, substituting false data to give creditors lower scores.
According to news reports, Wells Fargo was not alone in pushing such practices. Joining them were most if not all of the nation’s top banks including Chase-Manhattan and Citigroup. Under the leadership former secretary of the Treasury Robert Rubin, Citigroup is said to have masterminded the practice of marketing refinancing of home loans at the turn of century with its ‘Live Richly,’ ad campaigns.
Meanwhile according to the Des Moines Register, Wells Fargo & Co. made $40.9 billion in mortgage originations in March. Well Fargo, a major recipient of federal bailout money is accused by labor unions of refusing to assisting struggling companies resulting in layoffs.