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 influence.
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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