Banking giant Wells Fargo has been embroiled in many discrimination lawsuits over the years, the most recent one in February for discriminatory lending practices. As a result of Wells Fargo’s discriminatory lending practices against Black homebuyers, New York City has announced the city government will not open any new bank accounts with Wells Fargo & Co.
A Bloomberg News investigation helped NYC reach the decision. The Bloomberg investigation found the bank approved Black homeowners seeking to refinance mortgages during the pandemic at a much lower rate than white ones.
In a joint letter to Wells Fargo Chief Executive Officer Charlie Scharf, New York Mayor Eric Adams and Comptroller Brad Lander said the decision was due to the “checkered history” of Wells Fargo’s mortgage business going back to the 2008 financial crisis when the bank and others were accused, Investment News reported.
“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,” the two officials wrote.
The proof of the problem at Wells Fargo is in the numbers: Wells Fargo approved just 47 percent of Black homeowners who completed applications to refinance mortgages in 2020, compared with 72 percent of white applicants, according to the Bloomberg report. Although its approval rate for Black applicants increased to 58 percent in 2021, it was still behind white homeowners, 79 percent of whom had their bid to refinance approved.
Wells Fargo responded with an emailed statement that read in part, “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.”
The bank added, “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.”
Wells Fargo was hit with a class-action race discrimination class action on Feb. 17, in California Northern District Court.
The suit was filed just as a federal judge dismissed another lawsuit against Wells Fargo for alleged discriminatory lending.
On Feb. 23, a lawsuit the California city of Sacramento filed against the bank in February 2018, over alleged discriminatory lending ended without compensation to the city or people who purchased homes with expensive and risky loans. The city sued the bank in the U.S. District Court in Sacramento, alleging that Wells Fargo had steered Black and Latino homebuyers toward higher cost or higher risk loans and that the homeowners subsequently lost their houses to foreclosure at a higher rate. Additionally, Sacramento alleged the bank refused to extend credit to non-white borrowers looking to refinance “previously issued unnecessarily expensive loans.” A federal judge dismissed the case, The Sacramento Bee reported.
This article has been update to reflect a response from Wells Fargo.