Wells Fargo involved in race discrimination

originally appeared in the San Francisco Examiner from Reuters:

Wells Fargo has agreed to pay $175 million to resolve allegations that the financial institution discriminated against qualified black and Hispanic borrowers in its mortgage lending according to the U.S. Justice Department.

In the second-largest settlement of its kind, the biggest U.S. mortgage lender will pay $125 million to borrowers who were allegedly steered into higher-priced subprime loans or who paid higher fees and rates than white borrowers.

Wells Fargo also will contribute $50 million to homebuyer assistance programs in eight metropolitan areas around the country. The government identified those areas as needing the most help in recovering from the housing crisis.

The settlement, which needs approval from a judge, would end the investigation into whether the fourth-largest U.S. bank knowingly targeted minorities between 2004 and 2009 for risky mortgages that came with higher costs, according to documents filed in the U.S. District Court for the District of Columbia.

The U.S. assistant attorney general for civil rights, said at a news conference in Washington, D.C. that this a case about real people, African-American and Latino, who suffered real harm as a result of Wells Fargo’s discriminatory lending practices, people with similar qualifications should be treated similarly. They should be judged by the content of their credit worthiness and not the color of their skin.

The government investigation found that loans submitted to Wells Fargo by mortgage brokers had varied interest rates, fees and costs based only on race and not correlated to the borrowers’ creditworthiness, according to the court document.

The Obama administration has mounted a campaign to closely monitor banks in order to ensure loan discrimination practices that were a part of the housing bust and led to record defaults are eliminated. Bank of America’s Countrywide Financial unit agreed in December to pay a record $335 million to settle similar charges.

Wells Fargo said it was settling the matter solely for the purpose of avoiding contested litigation with the U.S. Justice Department. In the consent order with the government, Wells asserted it treated all its customers fairly and without regard to race and national origin.

Wells Fargo Home Mortgage president said in a statement that he believes it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country’s housing recovery.

Wells Fargo Fires Man for 48-year-old Cardboard Dime

story first appeared on usatoday.com

A man who was fired over a 49-year-old arrest for putting a cardboard dime in a laundry machine, has turned down an offer from Wells Fargo to return to his job.

The bank fired Richard Eggers, a former customer service representative, in July under a federal employment rule for financial institutions that was expanded after the 2007-08 financial crisis.

Eggers declining the return had less, he says, to do with his own need, but rather as a statement about the thousands of working families hurt by the same rules.

Employment attorneys estimate that as many as 3,000 low-level bank employees have lost their jobs under the rule, which was expanded to include mortgage originators. The rule prohibits employment of anyone convicted of dishonest behavior.

Wells Fargo confirmed Wednesday that it offered to rehire Eggers on Oct. 12 and return him to work in his former position and at his former annual salary of $29,795. He was cleared to return to work in the banking sector by the Federal Deposit Insurance Corp. on Sept. 26, after it approved his request for an employment waiver.

A record number of fired bank workers are pursuing such waivers. The FDIC, which handles the waivers, is on pace for a record 189 applications this year and received 151 in 2011. The agency averaged 50 applications a year from 1995 to 2010.

Attorney Leonard Bates, who is representing Eggers for the Newkirk Law Firm in Des Moines, said his client sought to negotiate more humane terms for all Wells Fargo employees fired under the expanded employment rule. Those request included the following:

• Providing waiver application information to workers fired under the employment rule, as well as to workers facing new background checks to enable them to seek a waiver while still employed.
• Automatically approving unemployment applications filed by workers fired under the rule. 
• Reclassifying workers fired under the rule to "temporary layoff" or "administrative leave" to allow them to escape the stigma of being fired when seeking new employment. 
• Lobbying for the rule to be modified to ease the burden on low-level employees. 

Wells Fargo maintains that the terminations were forced on it by the expanded rule, which carries a $1 million-a-day fine for each violation.

The bank employs 13,000 people in the Des Moines area and 265,000 worldwide.

Some employees fired after the change had recent convictions, while others like Eggers were many years old. Though his wasn't a case of child abuse or anything that would have required a child protective services defense lawyer. Obviously, it was just a cardboard coin.

The tale of Eggers' firing has been reported by newspapers, TV news broadcasts, magazines and websites around the world the past two months, including the German magazine Der Speigel and the Guardian newspaper in England. He is scheduled to appear on Comedy Central's "The Colbert Report."