The organizer of, and a speaker at, the dinner is Wells Fargo CEO John Stumpf. Wells, you may recall, faces lawsuits from the state of Illinois and the city of Baltimore for allegedly discriminating against African-Americans and Latinos in their lending practices. The NAACP also has filed suit against the company, along with HSBC, charging Wells with "systematic, institutionalized racism in subprime home mortgage lending."
Specifically, Wells is accused of steering minorities into pricier subprime mortgages. A 2008 investigation by the Chicago Reporter found that Wells Fargo in 2005 issued African-American borrowers higher-cost mortgages 37 percent of the time, compared with about 5 percent for white borrowers. Among its other findings was that black homeowners earning more than $100,000 a year were more likely to get high-cost loans than white homeowners earning less than $35,000.
"As a result of its discriminatory and illegal mortgage lending practices, Wells Fargo transformed our cities' predominantly African-American and Latino neighborhoods into ground zero for subprime lending," said Illinois Attorney General Lisa Madigan in a statement in filing suit against Wells in July. "The dreams of many hardworking families have ended in foreclosure due to Wells Fargo's illegal and unfair conduct."
In Mayland, Baltimore officials sued Wells in U.S. district court in 2008, accusing it of targeting "minority communities for bad loans with discriminatory and unfair terms." Mayor Sheila Dixon said at the time that the company's lending practices drove up the rate of foreclosures in economically fragile neighborhoods and cost the city millions of dollars in lost tax revenue.
Elizabeth Jacobson, until 2007 the top subprime loan officer at Wells, said in an affidavit filed in the Baltimore case that Wells targeted African-Americans with "wealth building" seminars:
At some point in 2005. . . I remember preparing to participate in a wealth building seminar that was to be held in Greenbelt, Md. It was understood that the audience would be virtually all black. The point of the seminar was to get people to buy houses using Wells Fargo loans. At the seminar, the plan was to talk to attendees about "alternative lending." This was code language for subprime lending, but we were not supposed to use the word "subprime." I was supposed to be a speaker at this seminar, but was told by the Emerging Markets manager I was "too white" to appear before the audience. . . .Interestingly, Wells and the Urban League co-sponsor a guide on foreclosure prevention. Copies of the workbook are distributed at Wells-run "home preservation" workshops held across the country and at the group's affiliate offices. In a statement earlier this year touting the partnership, Urban League CEO Marc Morial said the "workbook complements the National Urban League's outreach efforts to homeowners in distress to help them stay in their homes."
I complained many times about what I though were unethical or possibly predatory loan practices Wells Fargo was engaged in. Managers never took any action to respond to my concerns.
Senior Urban League official Stephanie Jones in June appeared before the House subcommittee on financial institutions and consumer credit to testify on how to improve consumer literacy. Said Jones at the hearing:
The fundamental problem at the heart of today's crisis is that loan originators pushed borrowers into loan products that were inherently risky and unsustainable by design, and they did so notwithstanding the availability of the more suitable and affordable loans for which they qualified. . . . Financial literacy is at the core of the Urban League's mission to empower African Americans to attain economic self-sufficiency.Wells denies that its lending policies are discriminatory. The company in September filed a second motion to dismiss the case after the judge overseeing the proceedings unexpectedly recused himself. The case is now in discovery under U.S. District Judge Frederick Motz. In this country, thankfully, everyone is presumed innocent until proven guilty. But the seriousness of the allegations raises questions about why the Urban League would join forces with a company charged with discriminating against the group's very constituents.
The charges against Wells certainly conflict with the stated purpose of the awards dinner, where former U.S. Secretary of State Colin Powell will be honored. According to the Urban League, the event is to recognize "individuals and corporations who perpetuate the principle of equal opportunity and exhibit leadership qualities that result in notable contributions to the cause of equal rights."
Amber Jaynes, vice president of marketing and communications for the Urban League, told me she was unaware of the predatory lending charges leveled against Wells. She also was unsure of how Wells had come to be involved in the equal opportunity dinner.
I've requested clarification from the group, but at press time no one else was available to comment.
In response to my questions about Wells's relationship with the Urban League, a company spokeswoman emailed a statement defending its lending practices.
Wells Fargo has a longstanding commitment to communities where we do business across the country. We participate in and contribute to many worthwhile organizations, including the National Urban League. We fundamentally believe it's important to be an active participant in the local community.Update (7:13 pm): The Urban League got back to me with the following statement.
The National Urban League's partnership with Wells Fargo is focused on expanding housing counseling services and providing solutions to the foreclosure crisis our country is facing. In communities across the country, we help tens of thousands of homeowners forestall mortgage default, delinquency and foreclosure while educating them in mortgage refinance and loan modifications strategies. Wells Fargo's partnership with the National Urban League is focused on the work in these areas in 2010 and beyond.