Philadelphia Files Suit Against Wells Fargo For 'Discriminatory Lending'
PHILADELPHIA (CBS) -- The City of Philadelphia has sued Wells Fargo bank over what it claims is discriminatory lending. The city claims that the bank targets minority borrowers for high cost, high risk loans.
City Solicitor Sozi Tulante says, with the help of outside counsel, the city analyzed loans Wells Fargo made in Philadelphia.
"Those analyses show there are pretty significant disparities between African-Americans, Latinos and White borrowers," he said.
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Tulante says nearly a quarter of minority borrowers received the kind of high interest loans that often result in default, but less than eight percent of white borrowers did, and indeed, foreclosure rates in minority neighborhoods were nearly five times as high as in predominately white neighborhoods.
The suit alleges that many of the minority borrowers would have qualified for conventional loans but were steered to the higher cost loans, and that Wells Fargo encouraged it with employee incentives.
Tulante said, "We have six confidential witnesses who are former employees of Wells Fargo who detailed that they were directed as part of the policy to target minority borrowers."
The suit was filed in federal court, and follows similar suits in half a dozen cities including Baltimore, Miami, and Los Angeles.
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Wells Fargo denies the accusations in the suit, saying they do not reflect the way the bank operates in Philadelphia or any community it serves.
In a statement, the bank says it "will vigorously defend our record as a fair and responsible lender.... (and) continue to focus on helping customers... succeed financially."
