Monday, June 8, 2009

Banks and Accusations of Racial Discrimination

So often when people think about racial discrimination, images of the Ku Klux Klan terrorizing black people, insults related to language and stereotypes, or individual black men shot by the police come immediately to mind. However, those issues could be only the tip of the iceberg so to speak, and larger, more pervasive acts of racial discrimination might likely manifest in different ways.

Michael Powell reports in his New York Times article Bank Accused of Pushing Mortgage Deals on Blacks that Baltimore city officials have filed suit against Wells Fargo because loan officers for the company allegedly targeted African Americans for high interest subprime mortgages. “These loans” apparently “tipped hundreds of homeowners into foreclosure and cost the city tens of millions of dollars in taxes and city services.”

Affidavits from former Wells Fargo loan officers reveal that for at least a decade the company seems to have been “systematically singling out” working-class African Americans and giving them higher-interest loans than white Americans with similar income and credit histories.

To support its claims, Baltimore city officials released data showing that “more than half the properties subject to foreclosure on a Wells Fargo loan from 2005 to 2008 now stand vacant. And 71 percent of those are in predominantly black neighborhoods.”

In her Baltimore Sun article on the developments, Tricia Bishop notes that one former loan officer for the company explained that “Wells Fargo targeted black communities for bad loans by focusing on African-American churches, using black employees as its public face, and using software to translate marketing materials into various languages, including something called “African American.”

As one of the former loan officers noted in the affidavits, Wells Fargo often developed relationships with black church leaders because they were thought to have “a lot of influence and could convince congregants to take out subprime loans.”

Overall, Wells Fargo and individual loan officers stood to make substantial financial gains by assigning high-interest loans to working-class African Americans. And, those substantial financial gains may have been a basis for actively targeting that particular demographic.

So far, spokespersons for Wells Fargo have denied any wrongdoing on the company’s part but have not responded to the specific claims raised in the affidavits. As they mount a defense they might state that the former loan officers were a select few but not part of a larger coordinated effort.

We’ll likely hear more from Wells Fargo and the Baltimore plaintiffs if the trial progresses. In the meantime, those affidavits give us views of what systematic acts of racial discrimination with far-reaching effects might look like.

1 comment:

Thanatos02 said...

I don't think we'll hear anything from Wells Fargo then they're obligated to give by the general media which is, sadly to say, tired and moving on at this time.

When a larger media scene refused to crop up re: Wells Fargo's attitude, further coverage dwindled. I know for a fact that people picked up on this, but I don't think that the television will cover it.