The city is blaming Wells Fargo for the loss of millions of dollars of potential tax revenue, leading to budgetary limits for services like parks, policing, and libraries. City attorney Barbara Parker said in a statement after the filing, “Wells Fargo’s discriminatory conduct devastated individuals and communities, increasing poverty and wiping out or drastically reducing wealth for minority communities while bankers prospered.”
Officials for the city of Oakland filed a federal lawsuit in Northern California District Court on Monday against Wells Fargo, accusing the bank of luring 2.4 times as many minorities into predatory loans as non-minorities. Under the statutory authority given to municipalities by the Fair Housing Act (FHA), the city is suing the lender for violating the California Fair Employment and Housing Act, which forbids discrimination on the basis of race. The suit also blames the disproportionate interest rates for leading to a massive blight problem in some minority neighborhoods, where the foreclosure rate is 4.75 times than in non-minority dominant neighborhoods. The lawsuit also accuses of targeting minorities for high-interest loans when they could have qualified for more reasonable terms. Wells Fargo is also being accused of refusing to offer the same refinancing options to minorities as whites who were struggling to make payments.
The city is blaming Wells Fargo for the loss of millions of dollars of potential tax revenue, leading to budgetary limits for services like parks, policing, and libraries. City attorney Barbara Parker said in a statement after the filing, “Wells Fargo’s discriminatory conduct devastated individuals and communities, increasing poverty and wiping out or drastically reducing wealth for minority communities while bankers prospered.” The lawsuit is seeking punitive damages along with a court order demanding that Wells Fargo halt its discriminatory practices. The bank is denying the allegations of bias, with spokesman Ruben Pulido writing in an emailed statement, “The City Attorney’s accusations against Wells Fargo do not reflect how we operate in the communities where we do business and it’s disappointing that she has chosen this course of action over a collaborative approach to helping borrowers and homeowners in Oakland. Wells Fargo has been a part of the Oakland community for more than 140 years and we will vigorously defend our record as a fair and responsible lender.”
Oakland’s lawsuit will serve as a bellwether for the Fair Housing Act provision giving cities like Oakland the right to sue lenders for causing blight. Previous efforts from Miami, Los Angeles, as well as Cook County, Illinois, the home of Chicago, have all been dismissed. A ruling in a Florida appeals court earlier in the month, however, revived three dismissed lawsuits filed by Miami, reigniting hope for the Oakland and subsequent lawsuits of this variety. In addition to chastising Wells Fargo for its conduct in Oakland, Parker said in her statement the, “we are working with other municipalities to stop this unconscionable behavior.” The city of Los Angeles has already appealed its ruling.
Sources:
Contra Costa Times – Mike Blasky
Housing Wire – Ben Lane
Reuters – Dena Aubin
San Francisco Business Times – Mark Calvey
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