TheLoop21.com

By: Devona Walker (Add to your loop)
Mon, 06/08/2009 - 14:15

Wells Fargo is accused of targeting blacks for subprime loans.

Many continue to blame minorities for the economic crisis, but according to some loan officers who are taking part in just one of many lawsuits against some of the nation's leading banks, those lenders were intentionally targeting minorities.

The loan officers say the banks were engaged in a sort of reversed or re-vamped redlining, where black folks were intentionally targeted in their most sacred place, the church. The loan officers say the banks disregarded decent credit scores and relatively high wages and intentionally sold black and Latino families the most expensive subprime loans on the market. It was these racist practices, not the irresponsibility of minorities, that has brought down many communities leaving entire city blocks vacant. It has also threatened entire cities such as Detroit or Prince Georges County, Maryland — historically one of the most affluent black communities in the country. In fact, Baltimore, another community adversely affected by subprime lending is also suing the banks.

But unfortunately this story is being told only due to lawsuits. It should be told due to a federal criminal inquiry. While the left parades around talking about a truth commission into the Bush administration's treatment of torture detainees, no one is yet campaigning for a criminal investigation into the banks. 

Beth Jacobson, a former national loan officer for Wells Fargo, said her former employer 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,”  according to the New York Times.

She said loan officers pushed families who could have qualified for prime loans (those with lower interest rates) into subprime mortgages. Another loan officer furthered her remarks in a recent affidavit by saying employees at the bank frequently referred to blacks as "mud people" and to subprime lending as “ghetto loans.”

“We just went right after them,” Jacobson said in the New York Times article. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”

Back in the 1980s, some of you might be aware, the banks had a slightly different way of treating its black customers. It was called redlining, an arbitrary refusal to provide financial services or limited financial services to specific neighborhoods, generally because they were either comprised of poorer people or people of color. 

The banks usually allowed blacks and Latinos to have checking accounts and whatnot, services that carried very little risk. But when it came to mortgage or commercial lending, they just denied the loan across the board. This practice goes a long way toward explaining why there were such low home ownership rates among minorities for such a long period of time.