The Department of Justice is preparing a lawsuit against Wells Fargo, the nation's largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe...
Last week, the Fed said that perhaps more than 10,000 borrowers were inappropriately steered into subprime mortgage loans or had their loan documents falsified by bank personnel. Wells Fargo agreed to pay $85 million to settle the civil charges. It did not admit wrongdoing.
In its ongoing case against Baltimore, Wells Fargo stands accused of using those same practices, but deploying them against black borrowers in majority-black neighborhoods, an act commonly known as "reverse redlining." The city alleges that the bank targeted black borrowers, knowing they'd ultimately default on their loans, but did not fear shouldering the cost because Wells sold those loans to investors.
What's even more interesting is that its NOT the Justice Department division investigating financial crimes that is taking this action - its the Civil Rights Division. As Adam Serwer reminds us, this is the company where internal memos referred to blacks as "mud people."
What many of the poutragers forget when they wail about DOJ not prosecuting what the banks did that led to our economic collapse is that most of the worst offenses were actually not illegal...regulations were nonexistent or had been discarded, which was the real crime.
What we see here, however, is a whole different matter in that the loans might not have technically been illegal. But the attempt to target them to African Americans was. Hence DOJ and the Civil Rights Division are on the case - once again doing the work of good government.
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