In early May, the U.S. Supreme Court allowed a lawsuit against banking
giant, Wells Fargo, to proceed. The lawsuit was brought by the city of
Miami, alleging Wells Fargo engaged in discriminatory lending during the
housing “bubble.” Court documents revealed that Latinos and
undocumented workers were targeted during the time period when predatory
lending was in its heyday.
Wells Fargo Receives Diversity Award
Wells Fargo has faced one scandal after another over the past few years,
yet in what surely qualifies as an ironic situation, the bank recently
made the annual list of the 50 most diverse companies in the world, even
landing in the top ten. Almost simultaneously, with this award, the city
of Philadelphia fired Wells Fargo as the manager of their $2 billion payroll
account, claiming the bank’s actions have, time after time, shown
them to be the “antithesis of corporate social responsibility.”
One might wonder how a trailer in corporate social responsibility could
win a diversity award. It seems that in one area—their board of
directors—Wells Fargo shines. The Wells Fargo board is composed
of a diverse mixture which includes minorities and women, however; this
board may be more of the “front” the bank shows to the world,
rather than a reflection of the impact Wells Fargo has had in the real
world—particularly in communities where allegations of targeting
minorities and discriminatory lending practices abound.
Wells Fargo Receives “Needs to Improve” Rating from the OCC
Some believe the city of Miami will have a difficult time proving the allegations
against Wells Fargo—that they prey on minorities—particularly
in light of the recent diversity award. Others think these latest allegations
are just one more in a series of missteps made by Wells Fargo executives
over the past several years.
In 1977, the Community Reinvestment Act was implemented, which promoted
low-income neighborhood lending. Under the terms of the Act, Wells Fargo
recently received a “needs to improve” rating from the Office
of the Comptroller of the Currency. According to the OCC, an “extensive
and pervasive pattern and practice of discriminatory and illegal credit
practices across multiple lines of business within the bank, resulting
in significant harm to large numbers of consumers” was common at
Wells Fargo. The OCC is a non-partisan federal agency not swayed by local
Justification for Wells Fargo’s Bad Behavior?
When the CEO of Diversity Inc. was asked how Wells Fargo Bank made the
top ten on the diversity list this year, it was a struggle for him to
answer. The CEO asserted the Wells Fargo scandals fail to take the entire
situation into account, and added that “bad behavior is everywhere.” It is hoped that statement is not meant to remove responsibility
from large banks and corporations for their actions (i.e., “all the other kids were doing it…”).
The CEO did add that despite the diversity award Wells Fargo garnered,
it does not let the bank off the hook for hurting people and that he hopes
the bank will respond in an “ethical and moral way.” Further, he pointed out that many times scandal precedes corporate
diversity, pointing to Sodexo and Novartis as businesses which also made
the Diversity list after being involved in gender discrimination issues.
Wells Fargo Calls Allegations of Discriminatory Practices “Offensive”
Although a Wells Fargo spokesperson called the allegations that the bank
preyed on minorities “offensive,” attorney Mark Molumphy,
who represents the Wells Fargo shareholders in the current lawsuit, says
that since the lawsuit was filed, he has been contacted by dozens and
dozens of former customers and employees who are particularly upset by
the discriminatory practices. Molumphy has also received declarations
which relate to the bank’s targeting of undocumented workers.
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