Wells Fargo Caught Again in Predatory Lending Scheme

WellsFargocolorFLYERLittle Rock       We need to get rid of the three strikes program for people and institute it for banks, whose criminal conduct continues to rage unabated. Wells Fargo, the West Coast based banking center, is a serial abuser of mortgage borrowers using predatory practices. Cook County, home of Chicago, and 5 million good people, has sued the bank under the Fair Housing Act for racially discriminatory practices targeting African-American and Latino families from the point of origination past the point of payment and even foreclosure to make sure they always get theirs in a practice Cook County called equity stripping.

According to Bloomberg News,

“Equity stripping is an abusive form of ‘asset based lending’ that maximizes lender profits based on the value of the underlying asset and onerous loan terms, while in disregard for a borrower’s ability to repay,” according to the complaint. Aimed also at minority women, the bank’s fee structure and its practice of bundling mortgages to sell as securities allowed the lender to make money off loans even in the event of a foreclosure, the county said.

Who is surprised anymore?

Cook County is asking for $300 million in relief from Wells Fargo. The bank of course denies everything, but they can’t possibly have any credibility left with anyone. As always, they were obnoxious and combative in their response, having a spokesman say that it would be better if Cook County kept wasting its time trying to work with them rather than getting justice for their citizens.

Cook County is not the first metro area to push forward to protect its citizens these days with a Fair Housing claim. Earlier similar suits have been filed in Miami and Los Angeles against banks for similar practices. Miami’s suit was dismissed as untimely and is on appeal, but attempts to throw out the California claim have been unsuccessful.

Banks have been paying billions to settle mortgage abuse suits in record fines, yet little seems to have led them to stop such predatory practices. Suits have also been brought recently in other cities under the Community Reinvestment Act for direct discrimination in lending.

The New York Times and others continue to argue that the only proven path to citizen wealth is home ownership, and there is some merit to the claim, but with prices outstripping any possibility of ownership in many cities, and banks, like Wells Fargo, arguably targeting the very working people trying to create income security through home ownership, there seems to be a giant “L” for loser on the foreheads of low-and-moderate income families throughout the country. Recently Massachusetts Senator Elizabeth Warren announced her refusal to vote for approval of an undersecretary in the Treasury Department saying that the President and others needed to get the message that Wall Street should no longer be allowed to set the economic policy for the United States.

As long as banking and its allies play “throw the rock and hide the hand” in a persistent criminal conspiracy, working families can’t build wealth, and Warren and Cook County are right that we need more protection from these crooks.

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Another Deal Coming for the Bankers, Unlikely to Benefit Consumers

Dauphine Island       New reports have finally trickled out on a “last and final” deal between government regulators and the nation’s big banks over their irresponsible, immoral fleecing of consumers around home mortgages leaving millions as foreclosure victims.  Nothing about this settlement sounds really good for consumers particularly.  The whole thing smacks of end of the year, desk cleaning for government bureaucrats and bank lawyers looking to end the year with a big payday.

Take for example these snippets that have emerged on the deal so far:

  • Negotiations were top secret with word only coming out recently.
  • Cost of the paperwork trying to establish how banks fleeced consumers is mired in huge time sucking cost overruns (about 20 hours per loan file), and the estimated multi-year delays from these dilatory and expensive bank reviews could drag out for years.
  • Regulators proposed a $15 billion settlement on all outstanding matters, which would be cheap at 5 times that price, and the terms are already down to a potential $10 billion dollar deal.

You want to know more?  Are you sure?

All 14 of the major banks are reportedly ready to sign.  Let me tell you something for certain.  The only thing all 14 major banks would ever be ready to all sign is the list for a free lunch!    This all has the feeling of a velvet pillowcase being pulled over all of our heads so that the banks can get back to business without this in the background.  Was it only a week or two ago that we read the report that the banks are ticking off the Federal Reserve officials because they are profiteering on interest rates and refusing to move them down to the level allowed by the cheap money policy of the Reserve?  This settlement can be paid out of the margins of what they are fleecing on new loans right now!

What’s the money for?  According the Times report without them saying so, it’s “same ‘ol, same ‘ol.”  Almost $4 billion would be used as a pittance for people who have already lost their homes because of all of this chicanery.  The other $6 billion would be used to pad the balance sheets of the banks in the same way as past settlements:

Under the terms of the settlement being negotiated, $6 billion would come from banks to be used for relief for homeowners, including reducing their principal, helping them refinance and donating abandoned homes, the people said.

All of those things the banks should be doing on their own, and simply uses the money pitched in by the 14 banks to spread out losses on their balance sheets, transfers the money back to them in fact, and claiming “all the way to the bank” that they are helping their victims.

Hard to see any justice in this, but the point from the government and bankers seems to be to at least put us all out of the misery of continuing to read about it or foolishly hope that there will ever be any real relief or justice at the end of this fiasco.

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