Anderson@Large

Wells Fargo, Fraudsters and Tainted Money

For preachers and some civil rights organizations, including the NAACP and the National Urban League, no money is tainted. For them, the only thing wrong with contributions from pariah corporations is that there t'aint enough.

But enough is enough.

Today, the Justice Department announced a $25 billion agreement with the five largest mortgage servicers: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial (formerly GMAC). Attorney General Eric Holder said:

This agreement – the largest joint federal-state settlement ever obtained – is the result of unprecedented coordination among enforcement agencies throughout the government. It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will help to ensure the abuses of the past are not repeated.

Iowa Attorney General Tom Miller added:

This monitored agreement holds the banks accountable, it provides badly needed relief to homeowners, and it transforms the mortgage servicing industry so now homeowners will be protected and treated fairly.

In his remarks on the landmark housing settlement, President Obama said:

By now, it’s well known that millions of Americans who did the right thing and the responsible thing – shopped for a house, secured a mortgage that they could afford, made their payments on time – were, nevertheless, hurt badly by the irresponsible actions of others: by lenders who sold loans to people who couldn’t afford them; by buyers who knew they couldn’t afford them; by speculators who were looking to make a quick buck; by banks that took risky mortgages, packaged them up, and traded them off for large profits.

The NAACP and the National Urban League trade their credibility, such as it is, for sponsorship by banks that engaged in discriminatory and fraudulent lending practices. Pariah corporations have long sponsored civil rights organizations to buy their silence.

It's up to the rest of us to make some noise. Hey, Ben Jealous, how's your “partnership” with Wells Fargo working out?

Ask a Woman Who Knows

Last week the leaders of two civil rights organizations, Marc Morial and Benjamin Jealous, met with President Obama to discuss job creation and economic growth.

The readout of the meeting notes that Obama “congratulated the leaders on their upcoming conventions.”

As expected, my post about black female civil rights leaders being left out of the meeting sparked accusations that I am a “hater.” My response: Guilty as charged.

I hate that Wells Fargo was the “Lead Sponsor” of the NAACP’s 101st annual convention. And they’re still hooked up in Los Angeles.

The predatory lender was a “Principal Sponsor” of the National Urban League’s centennial conference, and will be back on board when the League kicks off its annual conference this week.

Now check this out: On Wednesday, the Federal Reserve Board ordered Wells Fargo to pay an $85 million fine for steering borrowers with good credit into subprime loans. I hate when that happens.

The order reads:

The $85 million civil money penalty is the largest the Board has assessed in a consumer-protection enforcement action and is the first formal enforcement action taken by a federal bank regulatory agency to address alleged steering of borrowers into high-cost, subprime loans.

[…]

The order addresses allegations that Wells Fargo Financial sales personnel steered borrowers who were potentially eligible for prime interest rate loans into loans at higher, subprime interest rates, resulting in greater costs to borrowers. The order also addresses separate allegations that Wells Fargo Financial sales personnel falsified information about borrowers’ incomes to make it appear that the borrowers qualified for loans when they would not have qualified based on their actual incomes.

I have been asked to identify the black women leaders who should have been invited. I will not name names because that would be a betrayal of their trust. Although they know their stuff, they would be ostracized and penalized for breaking the silence.

And I would really hate for that to happen.

UPDATE: The Huffington Post reports the Civil Rights Division of the U.S. Department of Justice is investigating Wells Fargo for “allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans.”

NAACP, Wells Fargo Still Hooked Up

A year ago, I broke the story that Wells Fargo was the lead sponsor of the NAACP’s 101st annual convention. I put the NAACP on blast for getting in bed with an “unequal opportunity lender.”

The relationship came on the heels of the NAACP dropping its three-year-old racial discrimination lawsuit against the subprime mortgage lender.

The NAACP has refused to disclose the financial terms of its “partnership” with Wells Fargo. But as a 501(c)(3), what it does in the dark eventually will be made public. So I made a mental note to check the civil rights organization’s IRS Form 990 to see how much it had been paid to hook up with the predatory lender.

It’s clear what the NAACP has become; now they’re just negotiating the price. So frankly, I put the issue on the backburner. That is until Saturday.

During the Investigative Reporters and Editors’ ethnic media watchdog workshop at the New York Times, IRE Executive Director Mark Horvit led a session on “key documents you can't live without.” Those documents include IRS Form 990, which nonprofits must file and make available for public inspection.

Back in the day, one had to go to a nonprofit’s office and demand to see its most recent filing. In the age of the Internet, one merely has to visit Guidestar and search its database.

It was serendipitous that someone asked Horvit to look up the NAACP’s Form 990.

A review of the NAACP’s 2009 Form 990 shows the organization raised a little over $3.5 million for its centennial convention in New York City, which I attended.

NAACP 2009 Form 990

In 2008, the NAACP raised $3 million for its 99th annual convention in Cincinnati.

The 990s set a baseline. I will update the story as information becomes available.

Meanwhile, the NAACP’s partner is under investigation by federal regulators and all 50 state attorneys general for illegal foreclosures by its mortgage servicers.

On Saturday, the New York Times editorialized:

Americans know that banks have mistreated borrowers in many ways in foreclosure cases. Among other things, they habitually filed false court documents. There were investigations. We’ve been waiting for federal and state regulators to crack down.

Prepare for a disappointment. As early as this week, federal bank regulators and the nation’s big banks are expected to close a deal that is supposed to address and correct the scandalous abuses. If these agreements are anything like the draft agreement recently published by the American Banker — and we believe they will be — they will be a wrist slap, at best. At worst, they are an attempt to preclude other efforts to hold banks accountable. They are unlikely to ease the foreclosure crisis.

The NAACP’s hookup with Wells Fargo is more than a disappointment. It’s a measure of the extent to which the nation’s oldest civil rights organization has lost its way.

NAACP, Wells Fargo and Kansas City Blues

The NAACP kicked off its 101st annual convention on Saturday at the Kansas City Convention Center.

 

Some are singing the blues because President Barack Obama decided to skip the convention.

The Senate is expected to vote on sweeping financial reform legislation this week.

It would have been awkward for Obama to talk about the need to change the way the financial sector does business at a convention whose lead sponsor is Wells Fargo.

The reckless practices of Wells Fargo and other bailed-out banksters triggered the financial crisis that drove the economy into a ditch.

Although Wells Fargo is being sued by several cities for targeting African Americans with subprime loans, the predator lender looms large over the convention.

While the NAACP stonewalls on the terms of its “partnership” with the predatory lender, the Associated Press reports Wells Fargo “will be at the convention talking to borrowers about modifying loan terms.”

If Wells Fargo’s record on loan modifications is any indication, it will be just that – talk.

Consider: An analysis by ProPublica found the federal government’s loan modification program, Making Home Affordable, is “still sputtering.” The $75 billion foreclosure prevention program is administered by the Treasury Department.

To date, only 23.8 percent of Wells Fargo’s borrowers have received a permanent loan modification. Nearly 50 percent have had their temporary modification canceled.

Reports vary as to the number of people at the convention. An indeterminable number are Wells Fargo borrowers.

How many NAACP convention-goers will have their loan modified after their talk with a housing counselor? Few, if any.

The “Financial Freedom Campaign Center” is little more than a fig leaf to cover up a partnership that benefits only certain people.

The NAACP is convening in the “Show Me” state, but it has yet to show the African American community how hooking up with Wells Fargo is in their interest.

NAACP, Wells Fargo and the Road Less Traveled

A little over a month ago, I alerted folks that Wells Fargo is a lead sponsor of the NAACP’s 101st annual convention.

The sponsorship came within weeks of the NAACP dropping its racial discrimination lawsuit against the subprime mortgage lender.

While patting itself on the back for getting Wells Fargo to commit to doing what the bank says it is already doing, the NAACP refuses to disclose the details of their “partnership.”

A number of cities, including Memphis and Baltimore, are suing Wells Fargo for its predatory lending practices. Tellingly, Memphis Mayor A. C. Wharton Jr. announced the lawsuit in front of the National Museum of Civil Rights at the Lorraine Motel.

The New York Times reports:

Not so long ago, Memphis, a city where a majority of the residents are black, was a symbol of a South where racial history no longer tightly constrained the choices of a rising black working and middle class. Now this city epitomizes something more grim: How rising unemployment and growing foreclosures in the recession have combined to destroy black wealth and income and erase two decades of slow progress.

[…]

The mayor and former bank loan officers point a finger of blame at large national banks — in particular, Wells Fargo. During the last decade, they say, these banks singled out blacks in Memphis to sell them risky high-cost mortgages and consumer loans.

The City of Memphis and Shelby County sued Wells Fargo late last year, asserting that the bank’s foreclosure rate in predominantly black neighborhoods was nearly seven times that of the foreclosure rate in predominantly white neighborhoods. Other banks, including Citibank and Countrywide, foreclosed in more equal measure.

The NAACP should be shouting about Wells Fargo’s lending practices from the rooftop of the Lorraine Motel. Instead, the nation’s oldest and largest civil rights organization is being sponsored by the predatory lender.

In addition to being a lead sponsor of the NAACP’s upcoming convention, Wells Fargo was a co-sponsor of the Leadership 500 Summit held last week in Florida.

The summit featured a workshop on maintaining and building wealth. I wasn’t there but it’s safe to assume the Wells Fargo representative did not acknowledge the bank’s role in destroying black wealth in Memphis and cities across the country.

While the NAACP provides Wells Fargo with a platform to try to bamboozle black folks, the national leadership continues to stonewall questions about their financial arrangement.

The NAACP must be transparent with the African American community. It should start by answering the questions posed by bloggers and others:

• How do the “fair mortgage lending principles” differ from Wells Fargo’s Responsible Lending Principles for Consumer Credit?
• Was a formal partnership agreement signed? If so, how will it be enforced?
• How will the NAACP secure remedies for those who have already lost their homes due to predatory lending?
• Does the NAACP have the resources to examine the lending practices of the fourth-largest U.S. bank with more than 27,000 employees?
• How will the NAACP be able to manage Wells Fargo’s behavior more effectively than the Treasury and Housing and Urban Development departments, and the Office of the Comptroller of the Currency?

During last week’s summit, NAACP President and CEO Benjamin Todd Jealous said the organization is moving in a new direction.

Transparency would be a step in the right direction. So far, it is the road less traveled.

Transparency for Thee, but Not for NAACP

Two weeks ago, I wrote a post about Wells Fargo’s sponsorship of the NAACP’s 101st annual convention that ignited a controversy. The heat from bloggers smoked out NAACP President and CEO Benjamin Todd Jealous.

Ben defended the NAACP’s partnership with Wells Fargo on the grounds the agreement “improves their practices and increases their transparency in ways that go far beyond what we could win in court.”

But there’s nothing groundbreaking about an agreement that commits Wells Fargo to doing what it says it is already doing.

Don’t take my word for it. Click here for “Wells Fargo & Co. Responsible Lending Principles for Consumer Credit.” The page was last updated Oct. 1, 2009.

Also, Wells Fargo has had an African American Business Services program since 1998.

As previously noted, I know Ben. I should also note that Ben has called me, but I have not returned his call. The reason: I don’t want to hear that I should trust him and not my lying eyes.

Instead, Ben should just answer the questions:

How do the “fair mortgage lending principles” differ from Wells Fargo’s Responsible Lending Principles for Consumer Credit?

Was a formal partnership agreement signed? If so, how will it be enforced?

Does the NAACP have the resources to examine the lending practices of the fourth-largest U.S. bank with more than 27,000 employees?

How will the NAACP be able to succeed when the Treasury Department, after a $25 billion $36.9 billion bailout, has not been able to get Wells Fargo to change its behavior towards struggling homeowners or increase access to capital for small businesses?

The Service Employees International Union’s profile of Wells Fargo states:

• Wells Fargo put taxpayers on the hook for up to $36.9 billion in bailout funds and programs plus an unknown amount from the Federal Reserve's $8 trillion in emergency programs. This money was supposed to help the banks get the economy going again. But little of this money has gone to relieve struggling homeowners and increase the flow of credit to small businesses.
• Despite its large portfolio of at risk mortgages, Wells Fargo has started trial mortgage modifications for only 11% of its 292,515 borrowers who are eligible for the Obama Administration’s Making Home Affordable Program (and are at least 60 days past due). At Wachovia, which Wells Fargo acquired in 2008, the number is even lower, 2% of 74,231 eligible borrowers.

SEIU should demand that the NAACP answer the questions. After all, SEIU is mobilizing support for the “Showdown on K Street.”

SEIU and allies will call out lobbyists for Big Bank -- Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo -- who are using campaign contributions to weaken financial regulatory reform.

The New York Times reports the NAACP and SEIU are organizing a rally in October to “create momentum for President Obama and Congress to enact more progressive-minded legislation on jobs, a financial overhaul and other matters.”

In his blog post, Ben wrote the NAACP paid a price for filing the lawsuit against Wells Fargo:

It was not without a price. Just before I did so, I informed our board that we would need to revise down our corporate revenue projections because we would be bringing lawsuits against corporate supporters . . . .

[...]

Wells Fargo stopped supporting our national events shortly after we announced the suit.

Ben asserted the agreement “does not interfere with but complements lawsuits brought by cities which are largely for remunerative damages.”

We now know dropping the lawsuit has been remunerative for the NAACP. But the civil rights organization has not disclosed how much remuneration it has received from Wells Fargo.

In addition to sponsoring the annual convention, Wells Fargo is a co-sponsor of the upcoming Leadership 500 Summit.

There is no such thing as free money. The question remains: What is Wells Fargo getting in exchange for its corporate support?

NAACP and Wells Fargo: Civil Rights and Civil Wrongs

The NAACP is the nation’s oldest civil rights organization. I have known just about every chief executive officer since the 1980s, from the late Ben Hooks to Ben Jealous.

Some longtime Board members are also longtime friends and colleagues.

I attended the NAACP’s Civil Rights School at Harvard Law School in 2007.

Still, I have been called a hater for pointing out that Wells Fargo is a lead sponsor of the NAACP’s 101st annual convention.

Whatever. It’s not what they call you, it’s what you answer to. And as sports agent Scott Boras famously observed:

If you are really effective at what you do, 95 percent of the things said about you will be negative.

I have been writing about the subprime mortgage crisis for quite a while. I’ve also organized housing symposia and policy sessions for the National Black Caucus of State Legislators.

Study after study after study shows African Americans were targeted by subprime lenders.

Wells Fargo was the largest originator of subprime mortgages.

The NAACP’s study, “Discrimination and Mortgage Lending in America: A Summary of the Disparate Impact of Subprime Mortgage Lending on African Americans,” concluded:

Nationwide, African Americans comprise 12 percent of the population age 18 and over. However, 52.4 percent of the loans awarded to African American borrowers are subprime and/or high‐cost. Across the nation, 1 in 33 homeowners is expected to lose a home to foreclosure—primarily as a result of a subprime loan made in 2005 and 2006. This national reality chills the ambitions of those seeking the American Dream of homeownership and threatens a loss of at least $164 billion—a figure that disproportionately impacts wealth building among African American families. While no single factor is responsible for the accumulated disadvantage presented by these disparities, discrimination in lending practices is a leading culprit.

In March 2009, Ben Jealous told the San Francisco Chronicle:

These banks have a pattern of charging black people more, even though they have good credit, good assets and good incomes. The higher interest can make the difference between being able to hold onto a home or lose it.

So, what has changed? It strains credulity to now say Wells Fargo is “the only virgin in the whorehouse.”

In his opening statement before the Subcommittee on the Constitution, Civil Rights, and Civil Liberties’ April 29, 2010, hearing on “Protecting the American Dream Part II: Combating Predatory Lending Under the Fair Housing Act,” House Judiciary Chairman John Conyers Jr. said:

Compelling evidence demonstrates that banks and mortgage companies have committed prohibited practices of predatory lending and reverse redlining targeted at minority communities across the country. The very same people victimized by redlining – the refusal to provide conventional loans in minority neighborhoods – are now victimized by reverse redlining – efforts to steer minority residents of those same neighborhoods towards high cost subprime or other predatory loans. These practices have played a key role in fueling the home foreclosure crisis and devastating communities of color across our nation.

For example, take my home state of Michigan. The NAACP has reported that 70.7% of subprime loans in Michigan in 2006 went to African-Americans. In 2009 and the first quarter of 2010, Michigan had the sixth highest foreclosure rate in the country. And as a 2009 study by the Applied Research Center found, Detroit neighborhoods with “high proportions of people of color have the highest foreclosure rates.”

BTW, Wells Fargo is a co-sponsor of NAACP’s Leadership 500 Summit, at which one of their employees will participate in a “Recession 101” workshop.

Oh, the irony.

Later today, I will be a guest on “Dr. Boyce Watkins on AOL Black Voices,” a “new show designed to enlighten and engage a broad audience on a multitude of hot and compelling topics.” We will talk about the NAACP and Wells Fargo, accountability, and where do we go from here.

Stay tuned.