Wells Fargo targeted minorities with predatory lending -- lawsuit

by Ryan Smith29 May 2014
A judge has nixed Wells Fargo’s motion to throw out a suit accusing it of predatory lending.

The lawsuit, filed by the city of Los Angeles, accuses the bank of engaging in predatory lending practices that targeted minority borrowers, leading to the loss of property tax revenue, according to a Reuters report.

The city’s attorneys allege that Wells Fargo has targeted minority borrowers since at least 2004, making loans the borrowers couldn’t afford to repay. The practice allegedly led to a disproportionate spike in foreclosures.

The city’s complain against Wells quotes former bank employees who said that predatory loans were specifically targeted to minorities and minority communities in LA, Reuters reported. The lawsuit also alleged that some borrowers were denied credit based on their race.

Wells Fargo, meanwhile, says it will defend what it called its efforts to expand home ownership in distressed neighborhoods.

“The court’s decision to allow the city attorney’s lawsuit to proceed, while disappointing, in no way suggests that the claims ultimately will prevail,” Wells spokesman Gary Kishner told Reuters.

LA has also filed suit against Citigroup, again alleging discriminatory lending. The city also filed a federal lawsuit against Bank of America last year.
 

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