Time to Act Against Wells Fargo's Egregious Practices

This article was originally written by Javier Palomarez for Newsmax and can be found on their website here.

Questioning the Federal Government's Resounding Silence Regarding Wells Fargo's Systemic Indifference

The recent revelations about Wells Fargo's involvement in an industry-wide probe into mortgage bankers' use of loan discounts has reignited discussions of the historic and consistent pattern of exploitative behavior within this banking giant.

The investigation explores their distribution of pricing exceptions, designed to secure deals in competitive markets. Disparities caught the attention of regulators, raising concerns about potential violations of U.S. fair lending laws. Particularly alarming is evidence indicating disparities in the distribution of these discounts to Hispanic, African American and women borrowers.

Wells Fargo's troubled history, marred by over 20 settlements and violations since 2016 for discriminatory practices, casts a dark shadow over these latest findings. A recent CNBC article highlighting the bank’s mortgage pricing discrimination warrants advocates like the United States Hispanic Business Council (USHBC) to demand a deeper inquiry into practices that have deliberately and meticulously targeted Hispanic and underserved communities.

In August 2023, the USHBC initially requested an audience with Wells Fargo CEO Charles Scharf to discuss the representation of Hispanics on the bank’s Board of Directors. Given the bank’s reliance on the Hispanic market, the intent of our initial outreach was to help introduce a better system of checks and balances and enhance protection for Hispanic consumers and communities. However, after a more thorough review of the bank’s history, the USHBC has learned of the bank’s wide-spread predatory practices, concurrent lawsuits and criminal investigations.

Wells Fargo's F-grade from the Better Business Bureau, its ongoing lawsuits and criminal investigations underscore deep-seated issues that demand urgent attention. Several examples of litigation and judgments against Wells Fargo highlight the gravity of the situation, including a federal lawsuit, a lawsuit in San Antonio, a federal criminal probe, and a recent settlement.

Banking and Finance Committee Chairman Sen. Sherrod Brown (D-OH) has even called out the bank's pattern of “repeatedly violating federal and state laws”. Additionally, Ranking Member of the House Financial Services Committee Congresswoman Maxine Waters (D-CA) has been “sounding the alarm on

Wells Fargo’s egregious track record and abusive practices that have repeatedly harmed millions of consumers.”

It’s true that Wells Fargo invests a noticeable amount of money into the Hispanic community through non-profits. However, this giving is not out of benevolence, or corporate responsibility, but rather to meet the legal requirement mandated by the Community Reinvestment Act (CRA). The CRA is a law that requires financial institutions to invest in the communities they serve. In actuality, the money Wells Fargo gives away pales in comparison to the fines they pay for taking advantage of the very same communities.

Despite these shocking revelations and the concerning patterns of misconduct within Wells Fargo, the federal government's response has been noticeably absent.The silence is not just disheartening; it raises serious questions about the government's commitment to reigning in mega-banks with a repeated history of improprieties.

Meanwhile, Wells Fargo recently announced the closure of 12 locations across the country; 6 branches were in marginalized communities with Hispanics, African Americans, or the elderly being the lead demographic.

These closures are part of an industry-wide trend. According to the National Community Reinvestment Coalition, a third of the locations that closed between 2017 and 2021 occurred in areas that were predominantly lower-income and majority-minority.

In fact, throughout the industry, over 2,000 branches have closed in only the first ten months of 2023. As closures increase, there is a growing risk that communities may transform into 'banking deserts.' This term refers to areas where residents lack access to a bank, or credit union, within a 10-mile radius.

Despite multiple attempts to engage Wells Fargo in good-faith discussions for solutions, their indifference and complacency further underscores institutional shortcomings within the organization. From the boardroom to their branches, their neglect of the Hispanic community facilitates harm to this valuable and growing consumer segment.

The USHBC implores the Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB), Senate and House Banking Committees and other relevant regulators to step forward and take decisive action against Wells Fargo's egregious practices. It is not just an ethical imperative, it is a crucial step towards fostering and securing economic growth and prosperity for all Americans.