'No place in New York City': Big city cutting ties with Wells Fargo over 'brazen and illegal' acts

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It appears Wells Fargo is starting to reap what it sows. New York City announced on April 8 that it is refusing to open new accounts with the financial company after a Bloomberg News study showed that the bank rejected more than half of its Black applicants looking to refinance their homes in 2020.

City Council Member Justin Brannan, chair of the committee on finance, called the disparity “indefensible” and “outrageous” in a news release from the mayor’s office. “In a world where we already expect big banks to flout the law and make their own rules, Wells Fargo really outdid themselves,” he said. “Over the past two years – of all the major mortgage lenders – Wells Fargo was alone in rejecting more Black homeowners than it accepted. These brazen and illegal discriminatory actions have no place in New York City.”

Brannan’s remarks were on par with many of the comments from city officials included in the release.

In a letter to Wells Fargo CEO & President Charles Scharf, Mayor Eric Adams and Comptroller Brad Lander stated:

“As the Mayor and Comptroller of New York City, a diverse community where Black homeowners own and are the primary residents of more than a quarter of two-to-four person homes, we are both gravely concerned about the recent report in Bloomberg that Wells Fargo rejected over half of Black applicants seeking to refinance their homes in 2020 while approving over 70% of white applicants.

“These disparate mortgage practices, layered upon a checkered history of steering homeowners of color into subprime mortgages, rejecting mortgages in redlined neighborhoods, and numerous outstanding consent decrees pertaining to mortgage practices, require a swift response by both your bank and stakeholders.

“In light of this persisting track record of discrimination, New York City will not be opening any new depository accounts with Wells Fargo Bank, N.A. as we continue to investigate these troubling findings.”

Wells Fargo’s history of discriminatory lending accusations is not recent.

Former New York City Mayor Bill de Blasio announced in May 2017 that he and then-Comptroller Scott Stringer would vote to “prohibit New York City from entering into new contracts for deposits with Wells Fargo, as well as suspend the bank’s role as a senior book-running manager for NYC General Obligation and Transactional Finance Authority bond sales.”

That year, Wells Fargo earned federal feedback that the company “needs improvement.” The Federal Community Reinvestment Act requires the Federal Reserve and other regulators to encourage banks to meet the credit needs of those earning low and moderate incomes in the communities those banks do business in.

“The rules are very clear: if you fall below ‘satisfactory,’ we will no longer do banking business with you,” de Blasio said at the time. “I encourage Wells Fargo to quickly clean up its act and do right by the millions of customers who trust the bank with their savings. Until then, we will not be entering new contracts with the bank.”

Wells Fargo apparently didn’t change enough to halt years of continued allegations of discriminatory lending.

In 2020, the same year that Wells Fargo agreed to pay $7.8 million in back wages and interest to resolve allegations of hiring discrimination, the company approved only 47% of refinancing applications launched by Black homeowners, according to the Bloomberg News report. That approval number for white homeowners was 72%.

In a statement emailed to Daily Kos last month, Wells Fargo said the “recent media story ignored critical information known to the authors about Wells Fargo’s strong track record of lending to Black homeowners and the full range of our efforts underway to help meet the homeownership needs of diverse customers.” The company accused Bloomberg of relying “on an analysis designed to present a skewed picture” of its lending efforts.

“The same data source used in the reporting—from lenders’ Home Mortgage Disclosure Act filings—shows that Wells Fargo originated more home loans to Black and Hispanic customers than any other bank over the last 10 years,” the company claimed. “The approximately 8,400 mortgage refinances we provided to Black homeowners in 2020 were more than any of the largest banks—a crucial fact never mentioned in the story—and in 2021 we increased that total by 88% and provided more than 15,700 mortgage refinances to Black homeowners.”

Wells Fargo touted programs aimed at making homes accessible to low- and moderate-income families and a goal to pursue more than $185 billion in “diverse lending commitments.”

The company did not detail how many Black applicants specifically were approved to participate in the programs compared to white applicants. Nor did it address the question of why a greater disparity exists at Wells Fargo between white and Black customers looking to refinance.

The business didn’t immediately respond to Daily Kos’ latest request for comment.

Tuesday, Apr 19, 2022 · 7:38:20 PM +00:00 · Lauren Sue

Wells Fargo released this statement in response to Mayor Adams’ announcement:

“We are deeply disappointed that Mayor Adams and Comptroller Lander would publish a press release like this based solely on a news report. More specifically, we are deeply disturbed by irresponsible allegations of discrimination that we believe do not stand up to scrutiny. We are confident that we follow relevant GSE guidelines in our decision making and that our underwriting practices are consistently applied regardless of a customer’s race or ethnicity. We do not believe that these claims are based on factual analysis. We welcome the opportunity to correct the record with city officials.

In 2020, Wells Fargo was the largest bank lender of purchase and refinances to Black families and this is consistent with our performance over the last decade (2011 – 2020), in which Wells Fargo helped as many Black families purchase homes as the next three largest bank lenders combined.

In addition:

Wells Fargo helped more Black homeowners refinance their mortgages in 2020 than any other bank.

The 83% increase in the company’s refinance loans to Black homeowners in 2020 compared with 2019 also was by far the biggest gain among the largest banks.

In 2021, Wells Fargo increased that total by 106% compared to 2020.

In 2020, if you include loans originated and loans purchased from correspondent sellers, Wells Fargo funded twice as many loans overall to Black customers as the next largest bank funder.

Unfounded attacks on Wells Fargo by the city stand in stark contrast to the significant long-term investments Wells Fargo has made including $1.3 billion through the New York City Housing and Development Corporation to finance more than 92 affordable housing projects; $33 million in Open for Business Fund grants to Community Development Financial Institutions and non-profits; and $19 million to support nonprofits in all five boroughs. While some other large companies have been shrinking their New York presence, Wells Fargo has meaningfully increased its headcount over the past 12 months.

Minority home-ownership and access to financing is a significant problem in this country, and Wells Fargo has been and remains committed to being a leader in taking action to help close this and other racial equity gaps.”

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