Wells Fargo exam serves as test case for new head of national regulatory agency
- Woodstock Institute
- Source: New York > NYC Consumer Debt Defense Project
An unprecedented alliance of groups from around the country and more than 2,750 people have called on the Office of the Comptroller of the Currency (OCC), the national bank regulator, to assign Wells Fargo a failing grade on its current examination of the bank’s performance in meeting the credit needs of communities. Wells Fargo is the first of the country’s largest banks examined for Community Reinvestment Act (CRA) compliance since the new Comptroller, Thomas J. Curry, was sworn into office in April of this year.
Four state-based community reinvestment groups – California Reinvestment Coalition, NEDAP, Reinvestment Partners, and Woodstock Institute – held a press briefing today on why they and other bank accountability advocates are pressing Comptroller Curry to issue Wells Fargo a failing grade on its current community reinvestment examination.
“The last time the OCC examined the bank’s community reinvestment performance, in 2008, the agency scandalously rated Wells as ‘Outstanding’,” said Sarah Ludwig, co-director of NEDAP, based in New York City. “The rating, issued during the throes of the financial meltdown, symbolized the OCC’s complicity in the bank’s predatory practices, which were clearly devastating low income neighborhoods and communities of color throughout the country.”
“We are calling on the new Comptroller to issue the lowest possible CRA rating of Substantial Noncompliance to Wells Fargo," said Alan Fisher, executive director of the California Reinvestment Coalition, based in San Francisco, California. "The bank is not only failing to meet consumer credit needs but is actually harming communities, and Comptroller Curry needs to show that the OCC’s days of providing cover for the big banks are over.”
“Wells Fargo is notorious for making high-cost payday loans, which carry annual percentage rates of 180%,” said Kristina Bedrossian of the California Reinvestment Coalition. “Wells Fargo uses its payday loans to lure customers into a debt trap that last more than six months, where customers often pay more in fees than the amount initially borrowed,” Bedrossian explained.
Wells Fargo makes its short-term, high-cost “Direct Deposit Advance” payday loans in 26 states, including Illinois and California, and has sought to introduce this loan product in states like New York and North Carolina, where advocates have successfully fought to keep payday lending out. Shielded by the OCC, which since 2004 has permitted national banks to circumvent state consumer protection laws, Wells Fargo makes payday loans on terms prohibited by states like California. Similarly, Wells Fargo exploits a regulatory loophole to circumvent the federal Military Lending Act, which prohibits lenders from making loans over 36% APR to active duty service members.
"Wells Fargo's mortgage servicing practices unfairly push some borrowers into foreclosure, devastating families and harming neighborhoods. Our clients continue to have their paperwork lost, phone calls not returned, and are arbitrarily denied loan modifications," said Peter Skillern, executive director of Reinvestment Partners, based in Durham, NC. "Housing counseling and legal service agencies across the country believe Wells Fargo often does not follow servicing guidelines mandated by the $26 billion National Mortgage Settlement."
"Consumers indicate that Wells Fargo continues to engage in mortgage lending discrimination and mortgage fraud across the U.S.,” said Katie Buitrago of the Chicago-based Woodstock Institute. The groups cited the long list of government enforcement actions, as well as lawsuits that cities, civil rights groups, and aggrieved families have filed against Wells Fargo, alleging civil rights violations and fraud. The U.S. Department of Justice, for example, sued the bank for steering borrowers of color into expensive subprime loans, and 49 attorneys general investigated Wells Fargo for engaging in fraudulent foreclosure practices, culminating in the national mortgage settlement.