The New York Times says that former employees of Wells Fargo admit that they "systematically singled out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages." "These loans," Baltimore officials have claimed in a federal lawsuit against Wells Fargo, "tipped hundreds of homeowners into foreclosure and cost the city tens of millions of dollars in taxes and city services." Why did the bank act with such malice? Because Wells Fargo "saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers pushed customers who could have qualified for prime loans into subprime mortgages. Wells Fargo employees picturesquely identified these transactions as "ghetto loans" made to “mud people.”
The city of Baltimore has filed a suit against Wells Fargo. "The toll taken by such policies, Baltimore officials argue, "is terrible. Data released by the city as part of the suit show that more than half the properties subject to foreclosure on a Wells Fargo loan from 2005 to 2008 now stand vacant. And 71 percent of those are in predominantly black neighborhoods."
It's called reverse redlining -- systematically marketing the most expensive and onerous loans to black customers.
So here's the deal. The city of Baltimore loses, the neighborhoods lose, individual families are financially crippled for a lifetime, and the CEO of Wells Fargo gets a 50% raise to $21,000,000 a year. What a deal!
What's going to happen to the suit? It was filed in January, 2008. Three years later, after a predictable spate of legal wrangling, a federal judge has allowed the suit to go forward, but not before Wells Fargo "succeeded in limiting the pretrial discovery the city has been able to get and in limiting the allegations and damages the city could claim if the case makes it to trial." A bank spokeswoman said Wells Fargo will “continue to defend ourselves vigorously.”
Here's what's going to happen. The bank, which has far greater resources that the city, will assign a couple of hundred lawyers to the case and wear down Baltimore with various hair-splitting motions. Judges will retire and/or die. The case will be in the courts for an unknown number of Jarndyce and Jarndyce units of time. After a generation or so, when most of the aggrieved will have long since left the earth, Wells Fargo will settle for a slap on the wrist and pay a nominal fine, but admit to no guilt. The bank will trumpet its vindication. Justice will not be served. It will be bought.
Can we possibly imagine what will have happened to the many thousandes of no-longer-occupied houses and to their one time oh-so hopeful purchasers? Nothing good, trust me.
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