Another consent order has been issued by the Department of Justice, this time with Wells Fargo & Company, the largest loan originator in the United States. Officials from both the Attorney General’s office and the bank signed the decree. It admits no wrongdoing on the part of this financial institution despite the devastation from its predatory lending practices.
The announced “settlement” of $175 million is misleading. At least $50 million is slated to go toward loan assistance programs that target people in African-American and Latino/a communities, who the DOJ says were victims of excessive fees. The remaining $125 million appears to be set aside for people who can prove they were charged additional bank fees because they belonged to oppressed groups.
Nowhere in the consent order does it call for a halt or moratorium on foreclosing homes where Wells Fargo has been involved in discriminatory loan practices. In other words, the home seizures will continue, even though some of the current homeowners may be eligible for monetary “damages.”
The fact that Wells Fargo maintained that it does not engage in discrimination speaks volumes about the character of those running the bank. In the signed legal documents, bank officials agreed to the consent order “solely for the purpose of avoiding contested litigation” with the DOJ.
According to Reuters, “A government investigation found 34,000 instances of Wells Fargo charging African Americans and Hispanics higher fees and rates on mortgages compared with white borrowers with similar credit profiles. In 4,000 of those cases, minority borrowers were steered into subprime mortgages even though they qualified for cheaper loans.” (July 12)
The consent order only covers mortgages written between 2004-2009. People Wells Fargo victimized before and after these dates are ineligible for assistance.
This settlement comes in the aftermath of a similar legal decision involving Bank of America, Chase and other institutions, allegedly valued at $335 million. That agreement, signed last winter, also fails to stop foreclosures.
This settlement needs a judge’s approval. In all likelihood the corporate media will trumpet this consent order as a victory for African Americans and Latina/os.
Under the consent order, other claims made against Wells Fargo will be considered settled. This includes a 2009 suit initiated by the state of Illinois on behalf of borrowers and an investigative complaint filed by the Pennsylvania Human Relations Commission.
Also settled was a lawsuit the city of Baltimore filed in 2008 charging Wells Fargo with engaging in the intentional targeting of oppressed communities when issuing predatory loans. The bank ostensibly reached an agreement over predatory lending in Memphis during May involving the same practice of targeting oppressed communities in what is called “reverse redlining.”
“Redlining” refers to the denial of loans to people of color or charging punitive fees. The practice is widespread within the banking and insurance sectors of the U.S. economy.
In all likelihood the corporate media will trumpet this consent order as a victory for African Americans and Latina/os. But that is hardly the case. Only complete restitution of property or payment for total financial loss will do.
Moratorium on foreclosures needed
Neither the consent orders between the federal government and Wells Fargo nor the earlier agreement signed by Bank of America, Chase and other institutions will stop the epidemic of foreclosures and evictions. What is needed is a federal moratorium on foreclosures to stop all home seizures by the banks and the government-controlled Fannie Mae and Freddie Mac agencies.
With the existence of widespread fraud and racial discrimination in the mortgage industry, the only sure method of providing relief to home owners would be a moratorium. Halting seizures and evictions would provide the federal government time to sort out the massive fraud and to hold those institutions financially and legally responsible.
Offering a few thousand dollars to families and individuals who have been denied fair treatment and due process is insulting. Those who have been put into foreclosure or who have already lost their homes will not receive justice from this consent order.
In addition, the loss of homes, disposable income, tax revenues, property values and the overall devastation of urban communities can in no way be addressed with a mere $175 million spread across numerous municipalities throughout the country. Working people’s homes are often the only real wealth they possess. Therefore, the seizure of their real estate is tantamount to complete economic disenfranchisement.
Using an executive order, President Obama could easily place a moratorium on all foreclosures throughout the U.S. Besides, most loans since the 2007-2008 economic crisis have been underwritten and assumed by the federal government through Fannie Mae and Freddie Mac.
Consequently, it is the tax dollars paid by the working class and all oppressed people in the U.S. that is subsidizing foreclosures and evictions by the banks. Thus the federal government has the responsibility to provide relief by immediately stopping this financial theft impacting millions throughout the country.