The Wells Fargo Watch

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  ICP has published a  book about the Wells-relevant topics of predatory lending, and corporate fraud - click here for sample chapters, here for a map, here for fast ordering and delivery, and here for other ordering information. CBS MarketWatch of April 23, 2004, says it has "some very funny moments."  The Washington Post of March 15, 2004, calls Predatory Bender: America in the Aughts "the first novel about predatory lending;" the London Times of April 15, 2004, "A Novel Approach," said it "has a cast of colorful characters."  See also, "City Lit: Roman a Klepto [Review of ‘Predatory Bender’]," by Matt Pacenza, City Limits, Sept.-Oct. 2004. The Pittsburgh City Paper says the 100-page afterword makes the "indispensable point that predatory lending is now being aggressively exported to the rest of the globe." Click here for that review; click here to Search This Site  For or with more information, contact us.

Updated May 12, 2008

      Inner City Press / Community on the Move (ICP) and its Fair Finance Watch have become increasingly concerned with Wells Fargo's predatory lending, including overseas. ICP first identified these issues at Wells in 1997 (see discussion of Wells' "Island Finance" and its 25% interest rate loans, below), and raised them then, and in 2000 (see, e.g., "N.Y. Activists Seek Nevada Hearing," Las Vegas Sun, Oct. 24, 2000, and "Consumer Advocates Want Hearings on Wells Fargo Deal," Associated Press, April 18-19, 2000 (Alaska). See also, "Group Objects to Wells Deals," by Todd Davenport, American Banker, July 29, 2003, Pg. 17, quoting ICP that "Wells Fargo is a predatory lender, and is exporting these practices beyond the United States." See also, "Group Files to Block Wells Fargo Acquisition," Seattle Post Intelligencer, July 29, 2002; "Wells Fargo Accused of Predatory Lending," Denver Post, July 29, 2003; "Wells Fargo Accused of Unfair Lending," Rocky Mountain News, July 29, 2003; longer list here.

Update of May 12, 2008: This week from the mailbag, from inside Wells Fargo Financial --

Subj: Attention Inner City Press
Date: 5/2/2008 2:10:09 P.M. Eastern Daylight Time
From: [Name withheld upon request]
To: Inner City Press

I am currently a Wells Fargo Financial employee.  I didn't know if you would be interested or not but I have some interesting information you may want to look into further.  I've been with Wells Fargo Financial since [redacted to preserve confidentiality of whistleblower].  I came right out of school and landed what I thought was a great career with a great company.  Little did I know that I am actually a consumer lender in the subprime mortgage industry.  Our main product is our Real Estate refinance which is subprime.  The average rate is about 10.5%.  My belief is that wells fargo financial is now downsizing and have found a clever way to lay off a lot of employees without getting into headlines as officially laying people off.  We have seen a huge decline over the last six months.  I come from a smaller state, last year around march of 2007 we had 50-some full time selling employees.  We are now down to 20-some.  People are leaving left and right and I am hoping to get out of here by the end of summer.  I am an assistant branch manager.  I have two points of interest that I would like to let you in on to see what your opinion is about the situation.

Point number 1:  New Performance Improvement Plan process (The PIP process as it is referred to here regarding the process of terminating a team member)

The process used to be that if you did not book 100k of new money lent over a 2 month period you were given a month to do at least 50k and over the next three months to book 150k total of new money to get off of the PIP. If you did not reach this, the company could recommend termination.  It has only happened to two team members since I have been with the company. 

The new pip process is as follows, if you have one month without doing 50k of new money you can be recommended for termination.  You have the following month to do 50k and if you do not you are out basically.  Another process that has changed recently that leads me to believe that we are currently downsizing is that processor role in our branches.  A processor processing all of the payoffs, paid outs, deals with title work, and insurance as well as ordering supplies for the branch and maintaining the current loan pipeline.  Every branch had one processor, until this month.  There are only 3 main processors in our district now, (there are 7 branches in our district)  the other 4 have now been placed into part time, glorified secretary rolls.  A processor now has up to 2-3 branches each to process for and did not receive any type of pay increase as a result outside of performance branch based bonuses.  Some of the part-timers have already decided to quit and there isn't any rush to replace them.

Point Number 2: Sub-Prime loans and Prime loans or (A-Paper Loans)

Our business model is confused.  We are supposed to be subprime lenders, we sell to customers with 620 or below fico scores, that is our target market.  Anyone who has been in a sales position knows that sales is about persistence, hard work, and of course leads.  Our lead base is mainly retail sales finance accounts (ex: tractor supplies financing, heating and cooling, carpet, furniture stores etc.)  Most of these customers usually finance with 12 months same as cash periods or 24 months same as cash periods etc.  Lately things are tight you basically have to have at least somewhat decent credit to get approved for this financing.  Somewhat decent credit is above 620 fico score.  Most of these retail sales accounts are 700 credit score customers and so forth.  Our job is to call these customers and service those accounts and cross sell, credit cards, auto loan refinancing to pay off credit cards, and most importantly real estate restructuring.  Taking the equity you have in your home to combo other bills to put them into one ultimate loan with a lower payment and hopefully an overall lower total payback (which is rare).

Most of these customers could go to their bank and do the same thing at a much lower interest rate. Our company doesn't want us selling prime loans because we don't make money on these loans.  If we book a loan and it ends up going prime we do not receive credit for it as a unit or a loan.  We do get paid 175 bucks for each prime loan we book but if you do nothing but prime loans you will show no new money credit for these loans and zero units thus making it look like you didn't do anything.  As a result you would be pipped and begin the process of termination.  There is a way for us to keep a prime customer from going prime, if we can convince the credit grade A, no matter what the fico score it could be and 850, to take a loan over 91% of the total loan value (example 100k home value, 91k loan amount) it will not go prime. 

The tricky part is this, we as team members do not know what rate the customer will qualify for, we have a matrix, every customer falls into a certain pricing non-prime grade meaning a 720 credit score can come up and it will show up as a 10% rate but if you go below 91% ltv it will show that it can be recommended for prime pricing. 

Let me give you a recent example:

I had a 736 fico customer coming in wanting to do a 124k total loan on a home he just had appraised about 6 months ago for 137k.  The appraisal itself was done by a friend of the customers to purposefully bring it down because the loan he was trying to complete was the result of a divorce.  I still took the chance and put in the total value as 137k.  At a 124k total loan his total interest rate quoted was 9.38%.  He had no choice, because of the way he was paid the bank would not cash flow him but we are very conservative as well but we were able to legitamitly cash flow him for the loan.  (wells fargo doesn't mess around when it comes to cash flowing loans, we get heavy documentation) We got an appraisal done (wells fargo also doesn't mess around when it comes to appraisals, we have absolutely no contact with the appraisers, we have a separate company that we pay to have the contact) the appraisal came back for 185k.  So obviously at this point, it would be tough for me to get this loan up to 91% ltv.  For me it was simple, i want to do the right thing but at the same time i have to book loans, they put pressure on you to book it subprime, i tried like hell to sell 91% loan and nearly succeeded.  The customer ended up only taking an extra 15k which still kept it below the 91% required to keep it from going prime.  Still at this point i am not able to disclose to the customer that all he had to simply do was take any loan under 91% and he would simply sign the final pricing disclosure showing a 9.38% rate but after a final review it will come back and give him a 5.5% -7% loan.  I still had to sell with the customer having the intentions he would be getting a 9.38% rate.  We sent up the final pricing disclosure it was recognized as prime and the customer ended up with a 5.5% fixed rate for 30 years to his surprise and glee.  That turned out great, of course it looks like I never booked a loan.  Second scenario would have been if the customer had agreed to take an extra 60k out putting him over the 91% ltv mark and thus keeping the loan at 9.38% for a 720 fico customer.  We can never inform them of this until after they agree to a higher rate like that is what they are getting and they get a prime loan.  If i would have booked this loan subprime in that particular month i would have received over 1k in total bonus money.  Instead, I didn't hit the mark required for bonus money and only received the 175k for booking a prime loan. 

This is of course a Cover Your Ass scenario for wells fargo but believe me, it is not a good thing to book a prime loan, i had my district manager yelling at me for not being able to sell the extra 60k because once it is prime it doesn't count for the branches records, or the districts record or the regions record.  No one gets credit. 

That is my fundamental reason for wanting to leave wells fargo financial.  I know we are in business to make money, but not at the expense of humanity. 

   We aim to have more on this...

Update of May 5, 2008:  from the Washington Post of May 2 we have the story of the owner of the Shark Club of Bethesda, John A. Tsiaoushis, in league with a gaggle of predatory lenders including Wells Fargo. For a house on Pennycress Lane, in January 2005, while Tsiaoushis owed more than $588,000 on the mortgage, he sold the house without repaying it. Court records show he created documents purportedly from the mortgage company, opened a post office box in Beltsville and had the settlement company send checks totaling $586,000 to the "mortgage company's" post office box, which Tsiaoushis then deposited. Using friends and associates, Tsiaoushis helped refinance the house for subsequent buyers. In each case, checks settling the transactions were sent to post office boxes opened by Tsiaoushis, court records show, after he presented phony documents indicating that all liens had been resolved. Court records show that CitiFinancial of Falls Church paid more than $670,000 in a refinancing scam; Accredited Home Lenders of San Diego paid $891,000 to "buy" the house; and Wells Fargo in Alexandria lent $585,000 in a refinancing scheme. First Franklin Financial of San Jose, which made the original, legitimate mortgage on the house, is owed $588,000, court records show."

   When sleazy lender First Franklin is the "legitimate" lender in a story, and CitiFinancial and Wells Fargo come in later without any due diligence, you get a picture of the corporate role in the current crisis....

Update of April 14, 2008: As Wells Fargo claimed to cut back on subprime lending in 2007, a new ICP Fair Finance Watch study has found that Wells continued making super high cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at least eight percent over comparable Treasury securities. Using 2007 Home Mortgage Disclosure Act data that was required to be released on March 31, ICP Fair Finance Watch has found that Wells Fargo, while making 381 HOEPA loans in 2007, placed African Americans in subprime loans 2.43 times more frequently than whites, and denied the applications of Hispanics 1.56 times more frequently than whites. The HMDA data for 2007 is the fourth year in which the data distinguishes which loans are over the FRB-defined "rate spread," of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.  More analysis will follow.

Update of March 10, 2008: Foreclosure tale from New York, by a charter-bus driver in the East Bronx who has a mortgage payment that went from $2,482 to $3,500 a month. I had a two-year teaser rate, now going up every six months to a maximum of 13.2 percent, "I spoke to Wells Fargo.  I tried to get them to keep the rate at the teaser rate, 6.8 percent...  I'm in a home that cost us $35,000 in the sixties. We refinanced three times, and we owe $400,000."

Update of March 3, 2008: Now Wells Fargo must file reports on its mortgage delinquencies and foreclosures with the Office of the Comptroller of the Currency. Information from October 2007 through February is due by March 31. Better late than never.

Update of January 21, 2008: In further chickens-coming-home-to-roost news, Wells posted its first decline in earnings in six years, with profits down 38%...

Update of January 14, 2008: Wells Fargo was sued last week by the City of Baltimore for predatory and discriminatory lending. The U.S. Conference of Mayors projected that 361 metropolitan areas would take an economic hit of $166 billion in 2008 because of the foreclosure crisis. The Baltimore area was expected to lose more than $1.6 billion in economic output, according to the Conference of Mayors...

Update of July 2, 2007: The National Association of Securities Dealers has fined Wells Fargo Securities LLC $250,000 for not disclosing that a series of research reports about Cadence Design Systems Inc. were written by an analyst who was seeking a job with the semiconductor designer...

Update of May 21, 2007: From a report last week, 2006 subprime mortgage volume and status of Wells Fargo  $27,869  Restated B&C volume, cut jobs, tightened menu.

Update of April 30, 2007: The Case of Wells Fargo and the Squishy Bed, Abusive Calls

From: [Name withheld in this format]
Date: 4/26/2007 10:37:42 AM
To:  Inner City Press

Subject: Wells Fargo
 Hello, In April 2006 I purchased a set of mattresses from a local furniture company, Banner Mattress.  Their finance service is with Wells Fargo. The terms were no interest until 2010.  I was never told there were to be minimum payments or when/if they were due. 
 Years ago I purchased new appliances from Home Depot and had the same terms.  I chose to pay them off in full on the date it was due.  I did so with no problem. Well immediately I started receiving phone calls from Wells Fargo telling me I was late and would be charged a $35.00 late charge.  I told them that's impossible I have a no interest loan until 2010.  Needless to say I paid them through my online banking account the $35.00 plus $35.00 late charge=$70.00.  There was no date given as to what would be a PAYMENT DATE.  Another time I spoke with the caller and
when I asked why they kept calling me after I paid them he shouted at me and said they never received the payment.  While talking to him I went to the bank's web page and pulled the payment history for Wells Fargo.  Not only had they received payment it told me the day and each month thereafter a payment for $35.00  He told me he would call me non-stop if he had to.  They continued to call/harass me NINE times a day SEVEN days a week.  I stopped answering the phone when I saw it was them. 
The pillow top mattress slowly became defective four months after I got it.  I thought I was imagining it as the salesman specifically told me it would "bounce back immediately".  After stopping into the store I was told to give it some time.  I did to the point I was waking up each night and the next morning with a terrible backache.  I then sent an e mail to Simmons explaining the problem which they never responded to.  I again went to the store and insisted he make a formal complaint.  With that he sent someone out to measure the depth of the permanent
depression=1 3/4". 
 The store contacted me a week later and told me their representative from Simmons said they would replace it.  At this point with all the hassle from Wells Fargo and now a defective mattress, I said no, I wanted my money back.  The store called back and said their Simmons contact refuses to return the mattress.  I then called Simmons myself and was rudely told the same thing by someone there.  At this point I called the store back and told them the same thing I did Simmons, fine I would write a letter to the Attorney General's office and to the BBB.  Debbie at the store told me to hold off as I wasn't the only one having problems with Simmons and she would see what she could do.  A week later she called back and said they would return it and repay me what I had paid Wells Fargo. 
Herein lies the problem.  I paid Wells Fargo $245.00 in 2006 and $105.00 in 2007(online bank statements as proof).  They told Banner I would only receive $280.00 back as I had 8 late charges of $25.00 each.  The store and I both do not understand how they can say this as that is not what the salesman presented as the contract when purchasing the mattresses.  Before I call Wells Fargo I would like to know what I can tell them to get my full refund?  How do you fight a company who treats their customers as badly as they do by harassing phone calls each and every day to an obsessive amount of nine times? 

Update of April 23, 2007: From the mailbag --

Subj: Wells Fargo Auto Finance 

Date: 3/27/2007

From: [Name withheld in this format]

To: Inner City Press

 I purchased a vehicle in February of 2006.  It was financed through Wells Fargo Auto Finance.  From February to November everything was fine.  Then everything started to unravel.  We made our November and December payments.  Then on December 28th, we got a phone call from collections saying that we were 9 days late on our December

payment.  I assured them that we were not.  I told them the payment was made on December 19th.  They informed me that payment was to cover November's payment.

I went back to check my bank statements.  The November payment cleared on the 21st of November.  The December payment cleared on the 22nd.

Come to find out, Wells Fargo received my November payment, but claims to have reversed that payment and sent it back.  Unfortunately, that money was never received by me or my bank.  So I faxed my bank statements showing the payment being deducted from my account and a confirmation number showing it going to Wells Fargo.

I get 4 to 5 calls from collections everyday, unless I ask to be removed from the call pool.  Then I only get calls every 5th day.  They claim that I am behind.  They are assessing $10 late fees all over the place and reporting my payment history to the credit bureaus.  All because they cannot see that they made a simple mistake and correct it.

Do you think that anyone has actually taken the time to apologize for all of this?  One person named Wayne was very apologetic...and I felt he was sincere.  I have talked to approximately 100 people...and only one had the guts to say that Wells Fargo should not be taking this long to correct the issue. As others have stated, I will never again do business with Wells Fargo.

Update of April 2, 2007: From the mailbag --

Subj: Wells Fargo Auto Finance 
Date: 3/27/2007 10:29:50 AM Eastern Standard Time
From: [Name withheld in this format]
To: Inner City Press

 I purchased a vehicle in February of 2006.  It was financed through Wells Fargo Auto Finance.  From February to November everything was  fine.  Then everything started to unravel.  We made our November and December payments.  Then on December 28th, we got a phone call from collections saying that we were 9 days late on our December payment.  I assured them that we were not.  I told them the payment
was made on December 19th.  They informed me that payment was to cover Novembers payment. I went back to check my bank statements.  The November payment  cleared on the 21st of November.  The December payment cleared on the 22nd.
Come to find out, Wells Fargo received my November payment, but claims to have reversed that payment and sent it back.  Unfortunately, that money was never received by me or my bank.  So I faxed my bank statements showing the payment being deducted from my account and a confirmation number showing it going to Wells Fargo.
I get 4 to 5 calls from collections everyday, unless I ask to be removed from the call pool.  Then I only get calls every 5th day.  They claim that I am behind.  They are assessing $10 late fees all over the place and reporting my payment history to the credit bureaus.  All because they cannot see that they made a simple mistake and correct it.
Do you think that anyone has actually taken the time to apologize for all of this?  One person named Wayne was very apologetic...and I felt he was sincere.  I have talked to approximately 100 people...and only one had the guts to say that Wells Fargo should not be taking this long to correct the issue.
I am getting ready to turn this over to the Better Business Bureau.  Hopefully the can help me out.  Because as we all know, Wells Fargo is not doing it. As others have stated, I will never again do business with Wells Fargo.

Update of March 5, 2007: From the mail bag:

Subj: Wells Fargo And ASC 

From: [Name withheld in this format at] malmstrom.af.mil

To: Inner City Press

I have been with Wells Fargo for a number of years. Not been a stellar client as far as my checking account goes I am ashamed to admit. But I am admitting it because it helps make sense of what recently happened. Christmas time I happened upon a secret shopping opportunity through what I thought was a trusted internet site. I proceeded to deposit the check assuming that Wells Fargo verifies funding. They held the check and released the money to me. As I turns out I was defrauded and the cashier’s check was stolen. When I asked Wells Fargo what happened to the verification, they stated that, “We only verify checks that are suspicious.” I told them that I had not been a stellar client and didn’t they think that a deposit of $4700 to an account that has NEVER had $4700 in it before would be suspicious? I mentioned to them that they at one time held a check for $300 from my father for three days. They are still holding me responsible for the money!

 And they also sold my mortgage to ASC where I have had many problems with billing. Lost checks, late payments, etc. I had no idea that this info existed. Suppose I will be refinancing now!

Update of February 26, 2007: Wells Fargo last week gave WARN Act notices to 250 subprime lending workers in South Carolina...

Update of January 1, 2007: We begin the year with a blind item. Which person recently ejected from Wells Fargo Mortgage in Milwaukee after being charged with race discrimination has resurfaced at Chase Mortgage? And isn't there some duty to tell future employers, to protect future consumers?

Update of November 20, 2006: Wells Fargo Auto Finance brags that its "Full Spectrum Pricing'' program enables the bank to serve prime and nonprime customers -- more predatory lending...

Last week Inner City Press sat down for an interview with the president of the Nagorno-Karabakh Republic, Arkady Ghoukasyan, and asked him about the fires, about the United Nations and other matters. Click here for the footage, on Google Video.

Update of October 2, 2006: Florida is suing a "Tampa-area company called Global Information Group Inc., claiming it made thousands of calls impersonating customers of companies including Verizon Communications Inc., tricking them into providing private call records. Earlier this year the company's principals agreed to pay $250,000 to settle the case, and to cease any pretexting activities." Global Information's customers include Wells Fargo...

Update of August 28, 2006: Wells Fargo sleaze, from the LA Times: Wells Fargo's supposed safeguards for detecting illicit banking activities by terrorists, drug smugglers and other criminals were so weak that federal regulators should have publicly reprimanded the San Francisco-based bank, according to a Treasury Department report released last week. Instead, senior banking regulators met with Wells Fargo CEO Dick Kovacevich, then overruled their own staff by letting Wells off with an informal enforcement action -- sparing Wells the scrutiny and embarrassment suffered by other banks that have been forced to disclose that regulators faulted their oversight systems. 

"We believe that [the Office of the Comptroller of the Currency] should have acted more quickly and forcefully to require Wells to strengthen its compliance and that OCC's failure to take formal enforcement action against Wells sent the wrong message to the banking industry about OCC's resolve to ensure that banks comply" with the Bank Secrecy Act, the inspector general's report said. The OCC staff recommended Feb. 4, 2005, that a formal cease-and-desist order be issued to Wells Fargo. Dick Kovacevich met five days later with top OCC officials, including Acting Comptroller of the Currency Julie Williams, who was then running the agency. After that meeting, the OCC pulled the recommended action from consideration by its top supervisory review committee, according to the report. On April 12, 2005, a new memo was issued recommending that the agency take informal action. Who's put at risk by Wells Fargo's laxities? For or with more information, contact us.

Update of July 31, 2006: More Wells and furniture: "El Dorado Furniture's success with its private-label credit card program has earned it the Wells Fargo Financial Retail Services Client Award.  Wells Fargo presents the award to deserving clients based on program participation and credit card sales volume.  'We are honored to be recognized for our successful partnership,' said Robert Capo, vice president of the nine-store Florida retailer"...

Update of July 24, 2006: Wells Fargo last week missed Wall Street earnings expectations by a penny in the second-quarter because it sold off adjustable rate mortgages and debt securities in the quarter at a $250 million loss. In Wells furniture news, this: "La-Z-Boy is a brand name consumers have known and trusted for close to 80 years," said Dan Abbott, president of Wells Fargo Financial Retail Services. 'We look forward to helping them continue to build brand awareness and attract new customers with the La-Z-Boy Furniture Galleries MasterCard credit card program.'" What's next? Water beds?

Update of July 17, 2006: Wells Fargo is the eighth largest services of subprime mortgages in the country, with $25 billion, an increase of 3.39 percent from the year before...

Update of July 10, 2006:  Indictment from another angle: environmental advocates note that Wells Fargo has invested millions of dollars in Massey Energy, which they say is destroying Appalachian communities with mountaintop coal removal...

Update of July 3, 2006: From Canada NewsWire of June 27: "Wells Fargo Financial Canada is looking for a bigger share of the non-prime mortgage market"...

Update of June 26, 2006: Mattress work, from a press release last week: "Mattress Firm, the No. 1 retailer of Sealy Mattress products, was recently honored as a recipient of the Wells Fargo Financial Retail Services Client Award... 'Mattress Firm continues to demonstrate its commitment to acquiring new customers and encouraging repeat purchases'... said Mark Hicks, senior vice president for Wells Fargo Financial Retail Services." 

Update of June 19, 2006: From "The Oregonian" newspaper of June 15:

"Federal Home Mortgage Disclosure Act statistics analyzed by Wells Fargo Home Mortgage, for example, show that single women took out 13,246 home mortgages in the Portland area in 2005, about 20 percent of all loans for purchases. That's roughly in line with the Realtor association's national average. The numbers crunched by Wells Fargo also suggest, however, that single males made 16,389 purchases in the Portland area during the same period, or 25 percent. That's significantly higher than the association's numbers. The problem is that the two sets of numbers don't allow for apples-to-apples comparisons. Walter Molony, spokesman for the National Association of Realtors, said the federal HMDA numbers don't include cash purchases and mortgages from small lenders. So they show only part of the picture, he concludes."

  So now Wells Fargo is "crunching" HMDA data for newspapers? But Wells Fargo elsewhere says that HMDA data don't prove anything....

Update of June 12, 2006: From the mail bag:

Subject: Fair Finance Watch

From: [Name withheld]

To: WellsWatch [at] innercitypress.org

Sent: Fri, 9 Jun 2006 10:53:14 -0400

   Fact of impossibility- My husband and I were recently approved for financing by Prosperity Mortgage (brokers affiliated with Wells Fargo) at 58% debt to income ratio. Our current annual salary puts us at the 28% federal income tax bracket. It is obvious that we do not have the means to make the payments of these expenses. How is it possible that we were approved if the payments are impossible to make? Aren’t mortgage companies in the business of making money- not reselling properties that have been foreclosed upon?

  You'd think...

Update of May 15, 2006: In all the talk of Wachovia's Golden West deal last week, the Charlotte Observer noted that it makes any "link up" between Wells Fargo and Wachovia less likely. So where might Wells go? Fifth Third? Damaged goods...

Update of May 8, 2006:  It's happened again. On May 5, Wells Fargo announced by press release that a computer containing confidential data about mortgage customers and prospective customers was missing and may have been stolen. Wells blamed it on "a global express shipping company" that had been delivering the computer from one of the bank's facilities to another. The missing data include names, addresses, Social Security numbers and mortgage loan deposit numbers....

Update of May 1, 2006:  Corporate watch -- among the companies served or previously served by those who last week won Wells Fargo board elections by Saddam Hussein-like margins are US WEST, PricewaterhouseCoopers, Pacific Telesis Group, Agensys, Foster Pepper PLLC, General Mills, SUPERVALU INC., and T-Mobile. Calling all...

Update of April 24, 2006: Inner City Press / Fair Finance Watch has conducted a comparative study of 2005 Home Mortgage Disclosure Act data, this time focused on New York City, and has found Wells Fargo denied applications from The Bronx three times more frequently than applications from Manhattan in 2005. Meanwhile, in Des Moines last week, Dick Kovacevich bragged that "Our growth here is nothing short of phenomenal. One out of every 245 Iowans works for Wells Fargo." No talk of the underlying corporate welfare, nor of Wells' questionable subprime lending...

Update of April 10, 2006: The 2005 Home Mortgage Disclosure Act data, which Inner City Press / Fair Finance Watch received in late March from Wells Fargo, reveal that, considering all conventional first-lien loans, Wells Fargo in 2005 confined African Americans to rate spread loans 3.31 times more frequently than whites. The Federal Reserve has defined higher-cost loans as those loans with annual percentage rates above the rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. More analysis will be forthcoming. For now, we note that in 2005, Wells Fargo made 795 super high-cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, using one definition, at least eight percent over comparable Treasury securities. Usury, anyone? Developing.

Update of April 3, 2006: At the subprime lender Wells Fargo Financial, the beat goes on, from West Coast to East. In the news last week, in Lancaster, California at the Lancaster Town Center mall at 10th Street West and Avenue K.  And east in Florida,  at Wells Fargo Financial America Inc., 3280 N. John Young Parkway in Kissimmee. Predatory lending is on the move...

Update of March 27, 2006: the Federal Reserve has now asked about Santander's acquisition from Wells Fargo of the subprime lender Island Finance, asking for detail on Santander's due diligence on Island. Santander responds that it will file by March 29, and that it considered much about Island Finance, including Home Mortgage Disclosure Act compliance. We'll see...

Update of March 6, 2006: Payday lender ACE Cash Express last week put out a press release bragging that that it has "amended its existing bank credit facility" with the involvement of Wells Fargo Bank is the Administrative Agent and Co-Lead Arranger."

Update of February 27, 2006: Some are citing the Des Moines parking lot of predator Wells Fargo Financial as a good example of eminent domain. But wasn't / isn't it rather corporate welfare?

Update of February 20, 2006: Wells’ sell-off to Santander of Island Finance in Puerto Rico was rubber stamped by the FTC last week, via an early termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act…

Updated February 13, 2006:  From the Buffalo News of Feb. 6: “In New York State, Wells employs 1,430 in offices in 47 cities. Its businesses statewide include Acordia, Wells Fargo Home Mortgage, Wells Fargo Century, Wells Fargo Equipment Finance, Wells Fargo Securities and Wells Fargo Financial.” That last one is the subprime… Also on Feb. 6, Wells Fargo announced via press release that “it has expanded its association with NASCAR's Petty Enterprises beyond Wells Fargo Financial, its consumer finance business, to encompass Wells Fargo Home Mortgage and all the company's business groups.” Petty subprime…

Update of February 6, 2006: In the run-up to Super Bowl XL in Detroit, Inner City Press / Fair Finance Watch has analyzed mortgage lending patterns in the Detroit Metropolitan Statistical Area in the most recent year for which data is available, 2004. At Wells Fargo Bank, N.A., American Americans were over 7.2 times more likely to be confined to higher cost loans than whites, and Hispanics were over 2.8 times more likely to be confined to higher cost loans than non-Hispanic whites…

Update of January 30, 2006:  Santander has announced a proposal to acquire the problematic subprime lender Island Finance (on which ICP has previously commented to the FRB) from Wells Fargo. ICP first became aware of Wells Fargo's subprime lender Island Finance in 1997, when the company (1) opened an office at 2866 Third Avenue in the South Bronx which charged 25% interest rates to all customers, without regard to credit history, then (2) closed the office and required the customers they'd lured to travel to a Wells Fargo Financial office in Queens or have "lates" imposed on their credit history (see sVillage Voice of July 15, 1997). Wells' Island Finance is (sub-) headquartered in San Juan, Puerto Rico, and has branches in Panama, Aruba, the U.S. Virgin Islands, and the Netherlands Antilles. It is a high-rate lender, and is also embroiled in litigation with its employees. See, e.g., Jagroop v. Island Fin. V.I., Inc., (U.S. District Court for the District of the Virgin Island, Division of St. Croix), 240 F. Supp. 2d 370; 2002 U.S. Dist. LEXIS 25153. Tellingly, Wells CEO Dick Kovacevich lobbied in person in May 2002 against a proposal in the Puerto Rican legislature, House Bill 1288, to impose a usury cap of 19.75%. See, Caribbean Business, May 16, 2002, quoting 27% interest rates and Kovacevich that, with the proposed rate cap, " I feel I’m being told Wells Fargo is not welcome in Puerto Rico... I don’t want to be threatening, just factual," and characterizing Wells as the U.S.'s "number one 'NAFTA bank,' with more banking stores and assets than any competitor within 60 miles of Mexico and Canada."  In acquiring Island Finance, Kovacevich said that it portended further expansion into other Latin American markets." (PR Newswire of May 4, 1995.) At the time, Wells stated that it had recently also "acquired Reliable Financial Services, Inc., an auto finance company headquartered in Rio Piedras, Puerto Rico, which manages $200 million in receivables." (PR Newswire of January 12, 1998.) Wells also lists "Island Finance" subsidiaries in the Cayman Islands, British West Indies, and in Trinidad and Tobago -- these are apparently not proposed to be acquired by Santander, although the precise scope of Santander’s proposal needs to be inquired into, publicly, by the Federal Reserve Board... .

Update of January 23, 2006: Pretending to be green, last week Wells Fargo announced the hiring of a new “of head of environmental finance.” He’s Barry Neal, previously a founding partner of El Paso Energy Corp.'s EP Power Finance LLC. How very environmental…

  From the mailbag:

Subject: Wells Fargo Financial - Unfair and miss leading Business Practices
Date: 1/18/2006 12:20:37 PM Eastern Standard Time
From: [Name withheld]
To: WellsWatch [at] innercitypress.org

I like to share this with your readers so to warn them of this injustice. I took a loan for $7,500 in July of 2002 for home improvement from Wells Fargo Financial.  The loan was broken down to 60 installments of  $182.38 totaling to 1,0942.80 from which $3,442.80 was the interests for 60 months.  I paid off the loan after I got my first statement in July of 2002.   As of December of 2005, I have been receiving statements for the amount of $182.38. 
I am told that although I paid off $7,500 I paid it towards my payments ahead of time and not paid off the loan.  So after 3 years, I still owe Wells Fargo the interest on the original $7,500, which amounts to $3,442.80.   I spoke to the Customer service on the phone and he kept saying the same thing and was unwilling to get that I cannot owe any finance charges if I paid of the original loan.
I am surprised how a large financial institution will not understand basic mathematics and is playing such tricks on their customers.     After having a saving account with this organization for over 20 years, I plan to close my accounts and move on with a more reliable and honest organization with some integrity.

Update of January 9, 2006: Last week’s American Banker reminds of Wells and money laundering: “industry observers said the [new OCC] guidance was a clear response to questions raised last year about its supervision of Wells Fargo & Co. Senior OCC managers overturned the recommendations of field examiners that Wells receive a formal cease-and-desist order for anti-laundering lapses. A February memo recommended a public enforcement action, but after a meeting between Julie Williams, then the acting comptroller, and Richard Kovacevich, the chief executive officer of Wells, the memo was redrafted to recommend a less strict, nonpublic action…. The Treasury Department's inspector general is investigating the matter and is expected to issue a report next month.”

Update of December 26, 2005:  The NASD on December 19 fined Wells Fargo $3 million, for abusive fund sale practices: steering investors into inappropriate fund share classes. Instead of selling class A shares Wells Fargo pushed class B and class C shares, which were less suited to the investors' needs, the NASD said. So: predatory in fund sales too…

Update of December 19, 2005: an APB from Salem, Oregon, where an employee of the subprime Wells Fargo Financial has moved over to the supposedly prime Wells Fargo Home Mortgage. Bringing predatory lending along? He could be asked – he’s pitching his number, at 503-982-2788… Higher up, selling at the top. Insiders at Wells, including Dick Kovacevich, sold a net 120,091 shares this quarter, according to SEC filings…

Update of December 12, 2005: Last week Wells CEO Dick Kovacevich said the company isn't interested in buying a stake in GMAC, stating that it wouldn't fit with Wells Fargo's usual strategy of not being a partial owner of business lines. This seems inconsistent with Wells' many "joint ventures" in mortgages, including subprime mortgages...

Update of December 5, 2005: Military personnel on active duty are being overcharged on high interest loans by banks including Wells Fargo, a new investigation of compliance with the Servicemembers’ Civil Relief Act (SCRA) by Inner City Press / Fair Finance Watch has uncovered.  Through documents obtained under the Freedom of Information Act, ICP had documented widespread violations of the SCRA, defrauding and overcharging of those in active military service, and regulatory inertia in dealing with the abuses.

            The Servicemembers’ Civil Relief Act, at 50 USCS Appendix Section 527(1)(a) provides that “An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.”

            The purpose of the SCRA, formerly known as the Soldiers’ and Sailors’ Civil Relief Act, is to provide interest rate relief and other protections “to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation.” Section 502.

  Wells Fargo’s practices are reflected in the complaint to the OCC now online at www.innercitypress.org/wellsscra54.jpg

“On [ ] January 2003, my Army Reserve Unit, the [REDACTED] received notification of mobilization and deployment to the Persian Gulf area. Within days I received my individual mobilization order, which specifically stated I was mobilized in accordance with Title 10, a Presidential call up, in support of Operation Enduring Freedom. I contacted Wells Fargo whom I had 2 home equity accounts with, and advised of my mobilization and the fact that I was eligible to receive a reduced interest rate of 6% on my two outstanding home equity accounts per the Soldiers and Sailors Civil Relief Act of 194[0]… In mid July 2003 I returned to my residence from the Persian Gulf at which time I learned from my wife that Wells Fargo never reduced our interest rate to 6% as is required by Federal law…”

  ICP will be pursuing these issues further. For or with more information, contact us.

Update of November 28, 2005: Inner City Press / Fair Finance Watch is analyzing Gulf Coast mortgage lenders in the Katrina-zone, identifying those which in 2004 had the worst disparities between the percentage of African American and white borrowers who were charged higher costs, over the Federally-defined rate spread of 3% over comparable Treasury securities on a first lien loan, 5% on subordinate liens.  Interim results including this finding, that in the New Orleans Metropolitan Statistical Area, Wells Fargo Bank, NA in 2004 was 3.4 times more likely to confine African Americans to higher cost rates spread loans than whites…

Update of November 21, 2005: Wells Fargo disclosed  last week that the “increased level of consumer bankruptcies filed before new bankruptcy laws took effect Oct. 17 will widen its fourth-quarter net loan charge-offs by an estimated $175 million, or 7 cents per share, after tax.”  So Wells took a charge for initializing effect. But after that, it’s all gravy...

Update of November 14, 2005: Feeling lucky? Last week Ameristar Casinos announced that that it has a new $1.2 billion senior secured credit facility arranged by... Wells Fargo Bank, N.A..  Meanwhile Wells also served as trustee on securities backed by subprime loans by Option One, which along with its affiliate H&R Block Mortgage makes more than 70% of its mortgages to African Americans in Missouri over the federally defined rate spread, of 3% over comparable Treasuries on a first lien, 5% on subordinate liens...

Update of November 7, 2005:  Wells Fargo has set aside $100 million to cover the impact that Hurricane Katrina might have on its loan portfolio. Howard Atkins, Wells' CFO, told the WSJ that the bank continues to evaluate the impact of Katrina. "We may find we don't need the $100 million," he said...

Update of October 31, 2005: The M&A grapevine tolls for Fifth Third, with publications from New York, Minneapolis and Cincinnati all predicted last week 5/3’s imminent take-over by Wells Fargo. Birds of a CRA-arrogant feather may flock together. We'll see.

Update of October 24, 2005: Wells Fargo Financial saw its profit drop by 53% to $79 million. The company said that was largely because the division set aside $100 million to cover loans it expected to go bad because of Hurricane Katrina. But many of these loans were unaffordable and unsuitable prior to any hurricane...

Update of October 17, 2005: We must of course note the U.S. District Court’s decisions in the cases by the OCC and the Clearing House banks -- including Wells Fargo --against the NY Attorney General, to avoid providing the credit score information they say would justify the racial disparities in their lending. Why should the public believe a defense that they go to court to conceal? Whether or not an appeal is taken, and whether or not it’s successful, the public must demand that the OCC bring enforcement action(s) on Wells Fargo’s disparities, and must separately pursue them, far and wide and ceaseless...

Update of October 10, 2005: We like edgy arts -- but not by predatory lenders. Last week the David Rockefeller-founded Business Committee for the Arts  have an awarded to the Wells’ subprime unit Wells Fargo Financial, which during the construction of its lair in Des Moines, allowed the surrounding wooden fence to become “a canvas for murals by Iowa artists.” How touching...

Update of October 3, 2005: From CNBC of September 25:

BARTIROMO: Now Wells Fargo offers a high percentage of sub-prime lending, and in that kind of lending, you're talking about triple the rate of foreclosures. Is that a concern for you?
KOVACEVICH: Well, we have--you have to price for that risk when you are--the most important thing is that you give borrowers a chance to borrow money. And these are riskier borrowers and you have to charge a higher rate for that risk. But you can't red-line this group. These are people who need loans, who want to buy a home, and we simply charge more for the risk that we're taking. And so far, that has turned out to be a good business for us. But as importantly, it's allowed people to buy homes, get into home ownership, that they wouldn't be able to do if we didn't offer these products to higher-risk, lower-income people.

Question: while not conceding those points, how do they address the non-mortgage part of Wells subprime lending? High cost furniture loans and the like?
 BARTIROMO: And what's your take on the current national post-Katrina story about race divisions in this country and the haves and the have-nots?
KOVACEVICH: Well, I think unfortunately there is some of that. But I think what we all have to do is work together to make sure that we reduce and eliminate any discrimination of any type. And companies, I think, corporate America has to take a leadership position in this because it starts with employment. And if people are employed, you know, they have jobs; they can integrate well into society. And the real tragedy is if you don't have a job, and what we ought to do is make sure that everyone has a job and not discriminate in any way in employment.

   We’ll see...

Update of September 26, 2005:  We've looked closer at Wells Fargo's 2004 lending record, this time in the Nashville MSA, considering which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien) -- Wells Fargo  in the Nashville Metropolitan Statistical Area in 2004

Whites: 2009 originations, 187 over the rate spread (11.81% of loans over the rate spread)

African Americans: 198 origination, 59 (38.02%)  over the rate spread -- 3.20 times higher than for whites...

 Meanwhile, HUD last week announced a $48,000 settlement with Prudential Locations, LLC for violations of the Real Estate Settlement Procedures Act. HUD found that Prudential's Honolulu real estate brokerage office leased a luxury car, offered vacations and provided other gifts to reward sales agents that referred business to an affiliated mortgage company. Prudential is affiliated with and has a financial interest in Wells Fargo Home Mortgage Hawaii, LLC. HUD's investigation found that Prudential hosted a ‘First Annual Wells Fargo Friends Party’ and invited only those sales agents that referred over $1 million in business to Wells Fargo.  Great...

Update of September 19, 2005: Wells Fargo Financial Acceptance trumpeted its subprime auto loans in Canada, naming its “Stagecoach Award” partners / co-conspirators, including  St. Jean Mazda  of St-Jean-sur-Richelieu, QC.  How do you say predatory lending en francais?

Update of September 12, 2005: From last week’s Mercury-News: “Antonio Lopez and Fabiolo Estrada... said they were contacted in 2003 and 2004 by phone by a broker from Wells Fargo Financial, the San Francisco bank's subprime lending unit. Convinced that refinancing their East San Jose home would help them pay off some department store bills and other debts, the couple refinanced in 2003 into a Wells Fargo loan with an interest rate of about 7.4 percent. Less than a year later, in early 2004, the broker suggested they refinance again to lower their interest rate. They got a 30-year loan with a rate of 6.25 percent for three years, which could rise later when the loan became adjustable. What they didn't realize, they said, was that the two loans were netting Wells Fargo and their loan representative a whopping four "points" each -- $ 27,000 in total fees and commission. It also cost them an additional $ 17,000 for a "prepayment penalty" for paying off the 2003 loan early. And their second loan would probably get steeply more expensive in a few years, requiring them to pay a lot more or refinance yet again. The couple, who had refinanced in the past, say they thought both loans had fixed rates for 30 years, and they didn't know how much they were paying the broker or about the prepayment expense. They said if their loan representative told them, he explained it at "150 miles per hour," Lopez said. "If I knew what I know now, I never would have refinanced so much," Lopez said. Wells Fargo said it cannot discuss the Lopez-Estrada loan, but said four points is standard when making loans to borrowers with subprime credit standing. The bank's senior vice president for its home and consumer finance group, Lynn Greenwood, said Wells Fargo would have taken into account any late payments on any debts, credit score and overall indebtedness when deciding the couple's loan rate.”

Update of September 5, 2005:  On August 30, Wells Fargo announced what it called improvements to its lending practices. Many of the reforms are less meaningful than claimed. For example, any fanfare about dropping mandatory arbitration now that anti-consumer class action reforms have been passed, and the GSEs no longer buy loans with arbitration clauses, is misplaced.  As set forth in Inner City Press’ Gulf Coast Watch, in Louisiana in 2004, over 30% of Wells Fargo’s mortgages in Louisiana were higher cost, rate spread loans.  Click here for more of ICP’s Gulf Coast Watch.

Update of August 29, 2005:  De rumores -- last week the British press was aflutter with the rumor that Wells Fargo would bid on Lloyds TSB. We’ll see...

Update of August 22, 2005:  On the furniture loan beat: "’We have seen favorable results with longer-term promotions, which allow cardholders to spread their payments out over an extended period of time, such as 12, 18 or 24 months,’ said Terry Fuller, senior vice president of business development for Wells Fargo Financial Retail Services.” Yeah -- extend the time, pay more in interest...

Update of August 15, 2005:  On August 11, Wells Fargo settled for $34 million a lawsuit accusing it of charging excessive credit card processing fees to businesses. Merchants accused Wells Fargo of extracting a variety of fees it never disclosed, and failing to explain the fees when asked. Sounds like Wells...

Update of August 1, 2005: From the mail bag, catching up:

Subj: WELLS FARGO 

Date: 7/12/2005 8:06:32 PM Eastern Standard Time

From: [Name withheld]

To: WellsWatch [at] INNERCITYPRESS.ORG

FOR ABOUT 10 YEARS I HAVE HAD AN ACCOUNT WITH WELLS FARGO AND NEVER HAD PROBLEMS UNTIL JAN. 05, I HAD ARRANGEMENTS FOR MY CHECKING ACCOUNT TO BE DEBITED MONTHLY TO PAY MY CARNOTE. HOWEVER, I RAN INTO A PROBLEM AND WAS SHORT OF MONEY ON THE DUE DATE, AND CALLED THE BRANCH TO HAVE THEM WAIT 2 DAYS UNTIL THEY DRAFTED THE PAYMENT, I CALLED AND MADE THE ARRANGEMENTS FOR THE 30TH INSTEAD OF THE 28TH. WELL, MY ACCOUNT WAS  DEBITED ON THE 30TH AND ALSO ON THE 28TH, WHICH CAUSED BOTH TO BE NSF. I HAD NO IDEA UNTIL A WEEK OR SO LATER THAT MY CHECKING ACCOUNT WAS DEBITED TWICE IN 2 DAYS , WHICH OF COURSE, AS YOU CAN IMAGINE , MY SHOCK AND HORROR OF MANY NSF NOTICES IN MY MAILBOX. I CALLED WELLS FARGO TO FIX THE PROBLEM, BUT JUST GOT THE RUN AROUND. THEY TOLD ME TO CALL CUSTOMER DISPUTES , SO I DID , AND WAS TOLD TO FAX A BANK STATEMENT. I FAXED MY BANK STATEMENT, WHICH CONTAINED BOTH DEBITS AND A NUMBER OF NSF FEES, AND STILL AS OF THIS DATE , HAVE NOT HEARD A WORD. I HAVE TRIED TO CALL CUSTOMER DISPUTES AGAIN, BUT NO ONE WILL RESOLVE THIS ISSUE, AND NOW , MYSTERIOUSLY, CUSTOMER DISPUTES DOES NOT EXIST. TO DATE, I AM BEING HARRASSED ON A DAILY BASIS, WELLS FARGO CLAIMS I AM A MONTH BEHIND ON MY CAR PAYMENT. A COLLECTOR CALLED ME AND TOLD ME MY ACCOUNT IS BEING REVIEWED BY THE REPO COMMITTEE, AND HE ALSO TOLD ME HE DID NOT CARE WHAT WELLS FARGO DID TO MY ACCOUNT AND FOR ME TO STOP TALKING IN CIRCLES , THAT I STILL HAD TO PAY THE NSF OR LOSE MY CAR. EVEN ON THE DAY THEY GET A PAYMENT, THEY WILL CALL TO SEE WHEN I AM GOING TO SEND ANOTHER. THEY CALL ME AT WORK , AT HOME SEVERAL TIMES A DAY. I HAVE THOUGHT OF CONTACTING AN ATTORNEY AND SUING THE HELL OUT OF THEM. I HAVE NEVER MISSED A PAYMENT. BUT THEY WILL NOT LISTEN TO ME OR RESOLVE THE SITUATION , OR EVEN REFUND MY NSF CHARGES THEY CAUSED.

Update of July 5, 2005: From the June 30 American Banker: “Some observers argued that any formal enforcement action would have prevented Wells from making acquisitions, such as the one it completed last week for First Community Capital Corp. of Houston. The $124 million deal was approved by the Federal Reserve Board, which noted that Wells was implementing improvements to its anti-laundering program. When the OCC memo became public, Wells' chief counsel, Jim Strother, acknowledged the anti-laundering problems and said his company was working to correct them. He would not discuss Wells' relationship with the OCC.”

            Of course, the OCC is suing to shield Wells Fargo from a fair lending inquiry from the New York State Attorney General...

More Wells Fargo in the shadows: the June 27 edition of the publication Furniture Today reported that “buying group Furniture First says it will offer a private-label credit card program through Wells Fargo Financial Retail Services. Wells Fargo will provide Furniture First members with account management and sales support, sales training, individualized client support, integrated technology and custom marketing solutions. Furniture First said the program will include a dedicated line of credit for approved customers, promoting larger purchases,” etc..

Update of June 27, 2005: The Federal Reserve’s June 23, 2005, Wells Fargo order recites that ICP “alleged that Wells Fargo engaged in discriminatory lending based on a review of the prices of loans extended to African-American and Hispanic borrowers as compared to white borrowers in 2004. The commenter based this allegation on 2004 HMDA data derived from loan application registers that it obtained from Wells Fargo. These data are preliminary and 2004 data for lenders in the aggregate are not yet available.” But since ICP’s assertions concerned Wells Fargo’s treatment of African Americans and whites (as well as comparing Wells to other lenders, whose data the Fed also has), here the Fed is hiding its head in the sand. Similarly on money laundering: while an OCC employee whistle-blew about the OCC letting Wells off the hook on Bank Secrecy Act laxity, the Fed’s order says “banking organizations operating in the United States are required to implement and operate effective anti-money laundering programs. In this case, the Board has considered the existing compliance risk-management systems and internal audit programs at Wells Fargo and the assessment of these systems and programs by the relevant federal and state supervisory agencies. The Board has also considered information provided by Wells Fargo on enhancements it has made and is currently making to its systems.”  Yeah, right...

            The Fed also recites that ICP “expressed concern about Wells Fargo’s and WF Bank’s information-security systems and cited a press report describing three instances of theft of computers containing information relating to customers of Wells Fargo’s subsidiaries. Wells Fargo represented that it is not aware of actual identity theft or fraudulent activity as a result of these incidents and that it provided potentially affected customers with notice of the thefts and credit bureau monitoring and identity theft insurance services. In reviewing Wells Fargo’s application, the Board has considered the enhancements Wells Fargo is making to its information security systems and has consulted with the OCC, the primary federal supervisor of WF Bank.” This in an environment of accelerating violations of consumers’ privacy...

            In footnote 13, the Fed says that ICP “criticized Wells Fargo’s relationships with unaffiliated payday and car title lenders and other nontraditional providers of financial services. Wells Fargo represented that it has acted as a lender or provider of credit facilities and in other ordinary business relationships to unaffiliated consumer finance businesses, which may include payday and title lenders. Wells Fargo stated that it does not participate in the credit review process of such lenders and customarily requires the entities to represent, warrant, and covenant to Wells Fargo in credit agreements that such entities have and will comply with all applicable laws in the conduct of their business.”  What’s being referred to here includes Wells Fargo funding a payday lender that is explicitly (and exclusively) directed at active duty military personnel...  Meanwhile last week, the Air Force newswire reported that the “Defense Department has launched a new effort to educate servicemembers about the dangers of borrowing from ‘loan-shark’ lending companies and to teach them how to avoid ending up in a spiral of compounding debt, a DOD official said here June 17. The most prevalent type of loan-shark lending affecting servicemembers is what is known as ‘payday loans,’ said John Molino, deputy undersecretary of defense for military community and family policy.”  But on the issue of Wells Fargo’s lending to payday lenders which target military personnel, the Fed has done nothing...

            The Fed also says that “although the HMDA data may reflect certain disparities in the rates of loan applications, originations, and denials among members of different racial groups in certain local areas, the HMDA data do not demonstrate that the WF Prime Lenders are excluding any racial group on a prohibited basis. The Board, nevertheless, is concerned when the record of an institution indicates disparities in lending and believes that all banks are obligated to ensure that their lending practices are based on criteria that ensure not only safe and sound lending, but also equal access to credit by creditworthy applicants regardless of race or income level.”  So the Board is concerned. Where’s the action?
            In note 34, the Fed says that ICP “criticized the customer service and complaint procedures of a Wells Fargo subsidiary engaged in subprime lending in Puerto Rico and urged the Board, without specific allegations, to closely scrutinize the subprime lending operations of Wells Fargo in general. Wells Fargo originates subprime mortgage loans through WF Financial and Island Finance, and numerous joint ventures originate subprime loans that are underwritten and processed through WF Mortgage’s unit, Wells Fargo Mortgage Resource. WF Financial and Island Finance are nonbanking subsidiaries of Wells Fargo. As the Board has previously noted, subprime lending is a permissible activity that provides needed credit to consumers who have difficulty meeting conventional underwriting criteria. The Board, however, continues to expect all bank holding companies and their affiliates to conduct their subprime lending operations without any abusive lending practices. See, e.g. Royal Bank of Canada, 88 Federal Reserve Bulletin 385, 388 n. 18 (2002).”

            When the Fed finally (has to) consider the 2004 data, it will find at Wells Fargo nothing but abusive lending practices...

Update of June 20, 2005:  On June 16, both the Office of the Comptroller of the Currency and the Clearing House, a trade association of large banks, sued the New York Attorney General, seeking an injunction against investigation of disparities in the subprime lending of Wells Fargo and others...

Update of June 6, 2005: The Wall Street Journal of June 1 reported on Wells Fargo lowering fees -- but only for some customers, in seeming contradiction of the CRA, both letter and spirit: “In order to qualify for the lower costs, customers must have at least $25,000 in combined balances across deposit accounts they have at the bank, such as checking, savings accounts, certificates of deposits and individual retirement accounts, as well as any brokerage accounts. Credit-card balances, auto loans and as much as 10% of any mortgage balances with the bank are also included.”  Hmm...

Update of May 31, 2005:  Predatory lending is not limited to mortgages, and is also being exported, including by Wells Fargo. For example last week Furniture First, “a national buying group serving the retail home furnishings industry,” signed a contract to offer a private label credit card program through Wells Fargo Financial Retail Services. The press release specified: “Wells Fargo Financial Retail Services, headquartered in Des Moines, Iowa, specializes in providing private label and dual-line credit card programs to retailers in North America. Its parent is Wells Fargo Financial. Wells Fargo Financial, a unit of Wells Fargo & Company, is a $38 billion company providing consumer installment and home equity lending, automobile financing, consumer and private label credit cards and commercial services to consumers and businesses. The company has approximately 19,000 team members and operates in 48 U.S. states, the 10 provinces of Canada, the Caribbean, Latin American and the Pacific Rim.” 

Update of May 23, 2005: ICP on May 20 submitted to the Florida Attorney General’s office an analysis of and demand for action on the glaring disparities in Wells Fargo’s 2004 mortgage lending in Florida:

Whites: 71,777 applications, leading to 10,071 denials (14.03% denied) and 50,226 originations; 2636 [or 5.25%] exceeded rate spread.
African Americans: 6694
applications, leading to 1922 denials (28.71% denied, 2.05 times higher than whites) and 3589 originations; 855 [or 23.82 percent] exceeded rate spread [4.54 times higher / more likely to be over rate spread than whites].

Latinos: 18,729 applications, leading to 2636 denials (20.71% denied, 1.48 times higher than whites) and 7754 originations; 378 [or 4.87 percent] exceeded rate spread [0.93 times “higher” / more likely to be over rate spread than whites].

            The Florida AG’s office has confirmed receipt...  For or with more information, contact us.

Update of May 16, 2005: This week we step back, temporarily, from drilling ever-deeper into the 2004 Home Mortgage Disclosure Act data. Because we’ve been asked about the Wells Fargo - America’s Servicing Company, we note that Fitch’s September 21, 2004, ratings press release states that “Wells Fargo's third-party servicing division, America's Servicing Company (ASC), services more than 184,000 loans totaling over $20 billion.”

Update of May 9, 2005: ICP Fair Finance Watch continues drilling deeper into the 2004 Home Mortgage Disclosure Act data.  Following its petitioning last week of state attorneys general, ICP was asked to produce a study of disparities by gender as well as race. The results, being forwarded to those who requested them, are not pretty. Here’s Wells Fargo:

White men: 554,755 originations of which 36,012 (or 6.49%) were at rate spread

White women: 196,396 originations of which 21,514 (or 10.95%) exceeded the rate spread (1.69 times higher / more likely to be rate spread than white men)

African American men: 29,858 originations of which 6357 (or 21.29%) exceeded the rate spread (3.28 times higher / more likely to be rate spread than white men)

African American women: 25,278 originations of which 7067 (or 27.96%) exceeded the rate spread (4.31 times higher / more likely to be rate spread than white men)

Hispanic men: 55.126 originations of which 5763 (or 10.45%) exceeded the rate spread (1.61 times higher / more likely to be rate spread than white men)

Hispanic women: 19,276 originations of which 2843 (or 14.75%) exceeded the rate spread (2.27 times higher / more likely to be rate spread than white men)

            ICP has provided this and other analysis to the regulators and state attorneys general, demanding investigation and action.

 And here comes trouble: a building permit in Annapolis, Maryland for Wells Fargo Financial, at 167 Jennifer Road...

Update of May 2, 2005: At last week’s shareholders’ meeting, faced with criticism of his involvement on the boards of three other companies (Cargill Inc., Target Corp., and Cisco Systems Inc.), Dick Kovacevich  insisted that he gains insights into agriculture, retail, and technology from those companies, and that the insights benefit Wells.  (Why then he doesn’t serve on the board of directors of a payday lender is unclear, since Wells proudly and defiantly wants to continue lending to them).   When the shareholder suggested that the CEO was spreading himself too thin, Kovacevich quipped, "You sound like my wife." We could joke, but this is a family newspaper -- most of the time, at least.  Wells Fargo’s disparate lending has now been raised to ICP/FFW to the attorneys general not only in New York but in dozens of other states.  We’ll see.

Update of April 25, 2005: Inner City Press / Fair Finance Watch has reviewed, now for the New York City Metropolitan Statistical Area, the 2004 Home Mortgage Disclosure Act data of Wells Fargo, including the new information concerning which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien), and has found the following:

Whites: 11,028 originations of which 218 (or 1.98%) were at rate spread

African Americans: 1756 originations of which 224 (or 12.76%) were at rate spread (6.44 times higher / more likely to be rate spread than whites)

Latinos: 1664 originations of which 74 (or 4.45%) at rate spread (2.25 times higher / more likely to be rate spread than whites).

The ICP Fair Finance Watch is on the case, for now analyzing Wells Fargo’s 2004 mortgage data in other markets. 

Update of April 11, 2005: After first providing its 2004 Loan Application Register data in PDF format -- to prevent analysis, it seems clear -- Wells Fargo last week after complaints decided to provide it analyzable form.  The results are not pretty: At Wells Fargo for home purchase loans, African Americans borrowers are 3.9 times more like to receive a rate spread loan that white borrowers. This is only slightly less disparate that Citigroup, at which African Americans borrowers are 4.34 times more like to receive a higher-cost rate spread home purchase loan that white borrowers. Meanwhile, Wells Fargo denies the applications of African Americans for home purchase loans 2.3 times more frequently than those of whites, nearly as disparate as Citigroup’s 2.6 to one denial rate ratio between African Americans and whites. 

            At Wells Fargo for all types of mortgage loans, African Americans are 3.19 times more like to receive a rate spread loan than white borrowers. As we’ve noted, Wells Fargo is also a major funder of payday lenders, including targeters of military personnel such as Armed Forces Loans, Inc.. ICP has raised this directly to Wells Fargo, and to the Federal Reserve on Wells’ proposal to acquire First Community Capital Corp., which was announced back on September 2, was challenged by ICP on November 1, and which still remains pending, more than five months later. ICP has now put in a supplemental comment. Developing...

Update of April 4, 2005: This week it’s logistic. On February 28, ICP Fair Finance Watch made a formal request for Wells Fargo’s 2004 mortgage lending data; the data by regulation must be provided “by March 31 for a request received on or before March 1.” ICP’s request, directed to the signer of Wells Fargo’s previous responses to ICP’s regulatory comments, also inquired as a fair lending matter about Wells Fargo’s “safeguards, if any, for purchasing from, securitizing or serving as trustee for and otherwise assisting (including through warehouse lending) other subprime lenders, including payday lenders and car title lenders.”

            Wells Fargo waited the full month, then on March 31 provided its data -- in PDF. In this format it cannot be cumulated and analyzed and Wells Fargo knows this. ICP wrote to Wells Fargo

“immediately -- including in the context of Wells Fargo’s pending application to acquire First Community, on which ICP is a timely commenter and wishes to supplementally comment on the 2004 data -- to bring this to your attention” and re-requesting that the data be “provided in a single .DAT file, allowing analysis of the entire conglomerate’s patterns at one time.”

 ICP has also complained to the Federal Reserve. Click here to view the first of ICP’s studies; Wells will be in a future study, watch this space.

Update of March 28, 2005:  Among the range of Wells Fargo’s predatory practices is the stealth almost disavowed “America’s Servicing Company, on which we’ve previously reported. Among the week’s mail were these two, further on Wells’ ASC:

Subj: ASC IS NORWEST  

Date: 3/24/2005 8:28:54 PM Eastern Standard Time

From: [ ]

To: WellsWatch [at] innercitypress.org

I got a mortgage from Argent loan and sold to Ameriquest then to ASC which ended up as in CA.  ASC do not have any license as dept. of corp and dept of real

state. Also my search about " http://www.ascservicing.com " I found out ASC are same as Norwest also sub for wells fargo and as 3/4/2005, ASC has some legal cases under   National City Home Loan, HSBC Bank, Wells Fargo Home Mortgage, and more. ASC as "servicer" for all but do not have license in ca. or others too. I called more than 10 times and no one provide me any info all is secret only one person told me call BBB.  What about government agency?

  Yep - Federal Reserve, OCC, the states (send a cc to Inner City Press if you like).

Subj: America's Servicing Company 

Date: 3/25/2005 4:09:00 PM Eastern Standard Time

From: [ ]

To: WellsWatch [at] innercitypress.com

In 2004 I built a home. I had a construction loan through a local bank. Permanent loan was then obtained through RBC Centura bank.  This loan was sold to ACS.

Problems arose after ACS purchased loan. I was never notified that ACS had purchased loans. I continued to send my mortgage payment to RBC... RBC forwarded the installments to ACS for the first 60 days after they had sold loan to ACS. The installments RBC received from me after the 60 day time frame were returned to me with a letter stating they had sold loan to ACS in December of 2004 and had been forwarding my payments. The letter also advised the new mortgage company should contact me with account information etc.... I never received any notification that ACS had purchased the loan. I learned that I was in default and that I was placed in collections. I have Made repeated attempts to contact ACS to have this situation resolved to no avail....

Not only does this company not comply with fair lending and credit practices, they place accounts in collection without due course and process and without notification that they are the lender/mortgage company....

This has placed a burden on me as to impact to my credit standing and ability to obtain a mortgage with a reputable company.  I am subjected to increased cost of payments, increased interest rates and will be forced to pay additional fees to obtain refinancing...

 That’s Wells Fargo... .

Update of February 28, 2005: We'll focus this week on three sides of Wells Fargo: stealth servicing, disparate treatment, and the push into subprime. Last week (below), we reported on complaints about America's Servicing Company, including a request to know who owns it.  ICP went online and read that “America's Servicing Company, better known as ASC, a division of a well-known and respected mortgage company, is the subservicing/contract servicing operation. Loans may be serviced under the name of the client or ASC.”  Why say, “a well-known and respected mortgage company” without naming it?  Further inquiry found that this apparently ashamed owner of ASC is none other than Wells Fargo.

   Our noting this has given rise to more inquiries. For example:

Subj: ASC bka Wells Fargo 

Date: 2/24/2005 1:06:56 PM Eastern Standard Time

From: [ ]

To: WellsWatch [at] innercitypress.org

I just recently stumbled across your web page while i was doing some research about America's Servicing Company. 

I am really troubled about some practices and recently found out that they are the same as Wells Fargo.  ASC is currently my mortgage lender but i was offered a small loan in the month of December from Wells Fargo which I accepted....and they never indicated that they are the same as ASC.  I have been bombarded since then with phone calls from various offices of Wells Fargo (with all of my credit and personal info, I might add) offering to re-finance me with a 15 year lower interest rate (all financing and fees included i’m sure).  They have mailed me information and are constantly calling.  They asked me who I was currently with and I told them ASC.  They never indicated that they were the same.  When I filed my taxes, the tax preparer found that ASC and Wells Fargo had the same ID or tax number (meaning they are the same company?).  I just spoke with the representative in the office of Wells Fargo and he said that he doesn't know who ASC is and they have no affiliation and not the same.  He said that they are a publicly traded (what does that mean) company and have no affiliation with Wells Fargo.....needless to say, at this point i don't believe him. 

When I went to the web site i typed in subsidiaries of ASC and guess what came up.....yep, Wells Fargo.

  This is unfair and deceptive practices.

 We agree... Another Wells Fargo complaint received last week:

Date: 2/24/2005 5:39:57 PM Eastern Standard Time

From: [ ]

To: WellsWatch [at] innercitypress.org

 I am an Anglo massage therapist in Napa, CA...an area with a large Hispanic population.  Our chiropractic office has two Anglo employees and three Hispanic employees.  Yesterday, Dr. Brackett sent out Lupe, the Hispanic receptionist to cash a check at Wells Fargo for petty cash.  Because she didn't have a bank account there, they charged Lupe $5 to cash the check and required two IDs, and a thumb print.  When I have gone there to cash personal checks for my mother along with a business check for my pay, they have required $5 from me... but no extra ID and no thumb print. My mother's personal check for a much greater amount is never any problem.

So, this was my theory...Wells Fargo charges $5 to cash business checks here in Napa because they can get away with it.  Of course I wasn't going pay $5 to cash my check so I just took it to my mother and she cashed it for me.   But a migrant worker doesn't have the resources I do.  So, the next day, Tara Booth, the Anglo office manager went in to cash another check to test my theory that Lupe Valasquez was discriminated against...and they not only didn't charge her the $5 but they didn't require any extra ID! I know it is tiny compared to lending practices discrimination...but it really makes us mad!

   Us too (or, grammatical but stilted, “we as well”). And yet another:

Subj: Wells Fargo nightmare 

Date: 2/24/2005 5:51:40 PM Eastern Standard Time

From: [ ]

To: WellsWatch [at] innercitypress.org

Below is my letter to Wells Fargo, I have had no resolution.  I ended up signing at a 9.9% interest rate (I was leaving 5.5% on my construction loan) for no reason.  My credit score is 636 when I view it—they claim it is 580 but won’t show it to me.  I had no choice but to close as they kept me waiting until I was in a bind.  They then made me sign two papers, both of which I was told if I did not sign, I could not get the loan...   Please publish my story as it is a nightmare!

MY LETTER – No response yet

Wells Fargo Financial

Des Moines, IA 50309

To:  Thomas Shippee, Alan Blenner, David Kvamme, Michael McCoy & Dennis Young

I am writing this letter out of total frustration so that you can see what is going on with your company at the local level.

I am a real estate agent in Mississippi.  I have recently built a home and wanted to get permanent financing and pull my down payment back out.   (I put down $33,000 on the home).  I have several connections in Mortgage brokerage but I had recently heard that Wells Fargo was doing home mortgages in the prime market so I called the Jackson, Mississippi office, located on county line road.  I was asked to come in.  My husband and I went into the office and gave our information and had our credit checked.  We were told that we could get a home mortgage for 6.5 %.   This was one percent lower than the rate I currently had and I was told that because of my credit, I could never get the 5.5% again.   They said that they only use Trans Union and my score with them was 580.  My score has never been 580 with anyone.  I told them that I checked with all three agencies and my lowest score was 625.  They said that they figured it differently than I did.  Is a FICO score not the way to figure it? I didn’t understand this but I told them that I would take the higher rate if I could pull out at least $20,000 ( My loan with the bank was for $206,000.)  I was then told that if my home appraised for $250,000 or above, I could pull this money out and refinance the house at 6.5% on a three year ARM.  I told them okay and waited.  Two weeks later, after accumulating all of the paperwork, the appraisal came back at $265,000.  I was then told that it did not appraise high enough for me to pull the cash out.  I was told that they could refinance it but not pull the money out.   Why, I asked would I refinance at one percent higher rate and not pull money out?  I then inquired about a home equity loan or any type program where I could keep my original mortgage and just borrow against the equity.  I was told “they didn’t do that anymore” and I would have to refinance the entire home.  They offered me a rate of 7.25%.  Ben (the Manager) told me that I should take the 7.25% and pull out 95% of the equity, pay down my debt which was the only reason for my low score. Then, he stated,  my credit score would go up and he would refigure the loan based on the new credit score.  This entire time, I had pulled my credit online and showed 628.  Ben keeps insisting that their records showed my score at 580.  I could not understand why he showed such a lower score.  I asked him to run the credit again.  This is a total of two times I authorized for my credit to be checked.   After checking my credit, he said that it still showed 580 and that if I took the 7.25 % I could get up to 95% of the equity, pay down my debt and come in within 45 days and receive the new interest rate of 6.5.  I asked for this in writing and was told that “I had his word and it was their policy not to put things in writing.”  With time being lost (wasted) I told him to go ahead with the loan at 7.25% and then asked what the payment would be.  His payment was very much higher than what I figured it should be which he explained by the APR. Even though the rate was 7.25, it seems the payment was figured on 7.9.   Okay, I said, even though I have never heard of this I gave him the go ahead to submit the loan.  I was told we should get approval that day.  That was on a Friday.  The following Friday, after many phone calls and many reassurances that everything was fine, I was called and told to come in and close, the loan was ready.

My husband and I made the one hour trip down to the loan office and sat down with a girl we have never met to close the loan.  It turns out, the paperwork was done at 7.9% with $19,000 cash back and no other bills paid.  I told her that this was not the loan we had agreed to and she stated that they would not do the loan we agreed to.  I asked for Ben and was told he was headed out of town for the weekend.  I then asked for a number of someone higher that I could call.   I walked outside to make the call but since it was after 5:00, no one answered.  I then went in and told the girl that because they kept me waiting for over a month, I was now in a bind to get the loan and would sign the papers because I had to have the money but I was going to go to an attorney afterwards.  I was told that I couldn’t get the money for three days anyway.  I had never heard this before and in over 100 loan closings that I had been to, I have never seen a customer wait three days until getting the money.   I told her that I would sign and she then informed me that the loan had been cancelled.  I said “how can you cancel the loan in 5 minutes.”  She said she had.  I asked for a copy of the paperwork and was told she had just shredded it.  I then demanded that they get in touch with Ben.  I waited around a half hour for Ben to return my call.  He stated that they would not go over 85% at the interest rate of 7.9% and he was sorry he didn’t inform me of that earlier.  He stated that I could go 90% with an interest rate of 8.9% (which is incredibility high to me when there is nothing on my credit that I see that should keep me from getting a decent loan).  He said that they could do the 8.9% and then pay down the debt and I could come in and redo the loan within 45 days at no cost and my rate would be 7.9%.  Everything is now over a point higher than I agreed to. It seems, every week that I wait, the percentage goes up another point.  Now, I am in a bind, I have been lied to and played with for over a month.  I have no choice but to take what he is offering but I want you to know that not only will I never refer anyone to you for a mortgage, I plan to take an ad out in the Clarion Ledger about this and also to post a letter on the Realtor Multiple listing web site in Jackson.  I also plan to go to the attorney General regarding all the lies I was told.  AND to top it all off, I check my credit again last night to try and justify the 580 you keep claiming to show.  I got 627; it went down a point because you apparently have checked my credit 4 times in the last month, two of which were without my consent.  To say that this has been disappointing is an understatement, it has been a nightmare.   I will not let this die.  To top it all off, he still will not give me something in writing that states the rate will go down later and he has made me wait so long that it’s to late to start over with another company.  Is this the way you do business?

     Yes, that is how Wells does business..

Update of February 21, 2005:  A suspicious lack of candor:  last week ICP received complaints about America's Servicing Company, including a request to know who owns it.  ICP went online and read that “America's Servicing Company, better known as ASC, a division of a well-known and respected mortgage company, is the subservicing/contract servicing operation. Loans may be serviced under the name of the client or ASC.”  Why say, “a well-known and respected mortgage company” without naming it?  Further inquiry finds that this apparently ashamed owner of ASC is none other than Wells Fargo.  Now we understand...

Update of February 14, 2005: A Phoenix woman sued Wells Fargo & Co. in federal court on Feb. 9, alleging her former employer failed to pay overtime. The lawsuit seeks class-action status to represent thousands of current and former so-called ``business systems'' employees who produce automated versions of paper forms and perform other automation jobs. The suit was brought by Jasmin Gerlach, who worked in the bank's Phoenix office from 1995 to 2004. She claims she is entitled to being paid for past overtime work because she and others were wrongly classified as being exempt from overtime pay...

Update of January 31, 2005:  Tales of Wells Fargo Financial’s non-mortgage predation, from PhillyNews last week: on Nov. 28, 2003, Ms. Ying Zhang bought two bedroom sets and a table for $4,800 at Raymour & Flanigan in Wilmington, Delaware. The lender was Wells Fargo Financial. Zhang “made monthly payments, as required, and a final payment on Nov. 24. But when Zhang looked back at the paperwork, something didn't add up: Her final payment had included nearly $900 in accumulated interest.... Zhang first called Wells Fargo Financial, which provided the financing for Zhang and other customers at the privately held furniture retailer. A Wells Fargo rep referred Zhang to the contract she signed, which indeed did say, "The no interest option ends on 11/07/2004." When Zhang protested that the offer was for a year, not 11 months. [After PhillyNews’ inquiries,] Raymour & Flanigan spokesman Heather Ward called back to say that Wells Fargo would be sending Zhang a full refund of the interest she paid... Ward referred questions about financing to Wells Fargo. Bank spokesman Steve Carlson said the interest-free due date is disclosed on sales slips and monthly statements. Why does a ‘one year’ offer ever come due less than a year later? Carlson couldn't say, but told me: ‘If we have erred, we do what is right for the customer.’”  Yeah -- if they have a major metropolitan daily newspaper on their side. If not?   Well, that’s where Wells Fargo Financial’s profits come from...

Update of January 24, 2005: Wells on the prowl -- in an interview earlier this month, CEO Dick Kovacevich said his competitors “are running out of gas, and either they merge with someone to get restarted or they sell to someone... We're seeing more opportunities to do deals at closer to financially attractive levels than before."

Update of January 18, 2005: Wells Fargo announced on January 10 its stake in Charlotte NC-based Viewpointe LLC, which archives more than 25 billion electronic check images a year.  Given Wells Fargo's record in leaking (or having stolen) customers' private information, it’s questionable how good a fit this is...

Update of January 10, 2005:  Rumors of a merger were swirling over the weekend: Wells Fargo eying Barclays (which is more publicly making moves on South Africa’s Absa Group Ltd).  Well at least now the predatory lending is uniformly branded: on January 4 “Wells Fargo announced that its “Trans Canada Credit Corp. subsidiary has changed its name to Wells Fargo Financial Corporation Canada. Wells Fargo Financial, the consumer finance subsidiary of the financial services giant, acquired Trans Canada in November 1992 and operated it under that name until Jan. 1.” From Wells Fargo’s own press release: “One element of the name change project is creation of a new French logo and corporation name, Societe financiere Wells Fargo Canada, to be used in Quebec. It represents the first time a Wells Fargo entity has conducted business under a French name.”  At least one that can be printed in a family newspaper...

Update of December 20, 2004: Little shifts in Wells Fargo’s subprime auto lending business: last week, Wells Fargo Financial announced it will sell its Florida-based Consumer Auto Receivables auto loan unit to fellow-subprimer CompuCredit (which is also now a payday lender, with the f/k/a First American Cash Advance, and side deals with Synovus). To be sure, Wells is still in subprime auto: “Officials said Wells Fargo Financial will remain one of the premier non-prime automobile lenders in North America through its Philadelphia-based Wells Fargo Financial Acceptance business unit. That unit, which has about 580,000 customers, has more than $8 billion in receivables.”

Update of December 6, 2004: ICP has timely challenged Wells Fargo’s Texas application. Last week, ICP received a partial copy of Wells Fargo’s November 29, 2004, submission (the “Letter”).  The Letter at page 34 states that “Confidential Exhibit 9 (Question 6) contains a list of businesses with which Wells Fargo maintains a business relationship whose business operations may constitute subprime lending. This exhibit includes the [NAICS] code for these businesses, and the Wells Fargo lending group providing lending or services to each business.”   This is an outrageous withholding, given that ICP and now Bloomberg News (see below) have identified many of the fringe financiers which Wells Fargo funds or otherwise enables. Additionally, the above quoted does NOT fully respond to FRB Question 6, which asks not only about subprime lenders, but also “providers of non-traditional financial services (such as check cashers, pawn shops, or rent-to-own businesses).”  An additional response must be demanded and released, ICP has commented to the Fed...

Update of November 29, 2004: Hitting a new low, in last week’s Bloomberg News article about the funding of payday loans and lenders, Wells Fargo spokeswoman Susan Stanley-Jones spun: “Free and equal access to credit for any legitimate business that complies with all laws is a cornerstone of the free enterprise system.” This was in response to the showing, from ICP to Bloomberg and then on the wire, that Wells ” has extended credit to Payday Inc. in Albuquerque, New Mexico; Payday Plus Inc. in North Dakota; and Payday Express Inc. in Omaha, Nebraska, among others, according to UCC filings.” Bloomberg -- unlike, we’re hoping, another major publication -- missed the Wells - Armed Forces Loans, Inc. connection.  The big picture: Wells Fargo enables predatory lending, and is itself a predator...

Update of November 22, 2004:  From the mail bag:

Subj: Wells Fargo complaint to add to website list 

Date: 11/20/2004 9:17:28 AM Eastern Standard Time

From: [Name withheld at request]

To: WellsWatch [at] innercitypress.org

  I, too, have been mislead by individuals at Wells Fargo.  I had an increase in property taxes and had to seek other means of being able to afford my mortgage payment.  I received a call from Wells Fargo within the same week of receiving an annual escrow statement from my previous banking institution.  The coincidence was uncanny.  I explained to her the reason I had to refinance was because the property taxes had been increased without my knowledge and I wanted to be able to have affordable payments.  I was told that they would definitely be able to get us a reasonable rate with a lower monthly payment.  We proceeded with the loan.  The fact that sealed the deal was that we were informed that we could borrow the amount owed to our previous lender and in addition to this amount, we were told we could borrow enough money to cover fall of this year's property taxes and spring of next year as well.  During the processing of the closing, communication began to break down, we were given different facts about the entire process left and right.  The agent finally said that the loan had to be changed from a 30 yr. loan to a 15 yr. loan to get the amount of money that we wanted in order for the amount to be approved.  The rate appeared to be reasonable based on the monthly payment, so we consented still under the impression that the property taxes owed had been figured into the closing amount.  We recently received a letter from our previous lender stating that we had an overpayment.  Through investigation we discovered that property taxes had not been paid and figured into our refinanced loan amount.  When we called Wells Fargo to investigate this matter someone took our information and said they would get back to us.  At this point, they knew we were very frustrated and misinformed by someone.  We did not receive any phone call and in fact we had to track the agent down.   She ignored our calls.  When we spoke to her, she gave us the impression that this is the first she had heard about the situation and had to be informed all over again.  Obviously, she did not care about our concerns or she would have called us and made it a priority to get back with us.  She then informed us that based on our appraisal the amount which we had requested was denied because we didn't have enough equity.  This is totally false because our home appraised for $5,000 more than the loan amount we were asking for.  And at the time of closing, we were encouraged to borrow more money from them to consolidate other bills!    Credit is not an issue here---because both my fiancé and I have excellent credit and we wish to keep it that way.  Had we been informed that our Fall 04/Spring 05 taxes could not be factored into our loan amount we would have stayed with the previous lender.   As it is now, we are having to come up with over $200 more a month to cover bills compared to what our financial situation would have been had we just stayed with the previous lender.  The agent knew our concerns, knew our goals and she was only wanting to seal the deal.   I am appalled by the incompetence of this agent and the blatant disregard that she had for our concerns and our financial well being.   I feel that she purposefully withheld information from us in order to seal the deal.  This was unethical.  Had when been informed of the real facts we could have concluded that going with Wells Fargo was not in our best interest and we would not have proceeded with the loan.  Now we are locked in with Wells Fargo for three years because if we withdraw from them and refinance with someone else within that timeframe, they can charge us $7,000.  Please, I beg you to actively pursue your quest in holding Wells Fargo accountable for their actions.  They are simply wolves in sheep's clothing!!!!!   Sincerely,   A  Betrayed Customer  

Update of November 15, 2004:  Wells Fargo’s general counsel James Strother, with an opportunity to address Wells Fargo’s documented relationship with payday lenders including Armed Forces Loans, Inc., which directs its high-cost loans at active duty military personnel, has in a November 11 letter provided only boiler plate. “Wells Fargo and its affiliates have, on a transaction-by-transaction basis, acted as a lender or provider of credit facilities to unaffiliated entities engaged in consumer finance businesses which may including acting as a payday lender... Loan proceeds may or may not involve funding the actual lending operations of such entities...”.  Targeting high-cost payday loans at soldiers? ICP has replied....

Update of November 8, 2004:  While waiting for Wells Fargo’s response, in came Citigroup’s November 4 response to Inner City Press/Fair Finance Watch’s submission to the Federal Reserve and Office of the Comptroller of the Currency of Uniform Commercial Code filings by Citigroup and its proposed acquisition, First American Bank:

“ICP attaches certain records of [UCC] filings related to several Citigroup and FAB clients... As a practice, Citigroup and its bank subsidiaries do no engage in the business of funding check cashing or payday lending businesses. Citigroup’s account opening procedures and credit policies generally prohibit the opening of new accounts for businesses identified as check cashing operations. Citigroup does have a single active relationship with an armored car company that also includes a checking account to an affiliate in the check cashing business. This account predates the Citigroup procedures for check cashers, and Citigroup has been in the process of winding down the relationship pursuant to a gradual exit strategy.

“In addition, on occasion check cashing businesses have become customers in connection with Citigroup’s acquisition of other financial institutions. In such cases, Citigroup undertakes a post-acquisition review of these relationships and takes action to close or limit them, when appropriate. Citigroup makes changes to conform with its business practices as expeditiously as commercially reasonable, yet in a manner that does not unduly disrupt the operations of an existing client...”

            While contesting some of the above, ICP has now submitted a second timely comment on Wells Fargo. ICP in its first comment put into the record the commitment by another of Wells Fargo’s peers, SunTrust, to no longer fund payday lending or car title lending companies.  Now, as to Wells Fargo and check cashing companies, ICP has submitted some examples:

Arizona: ANYKIND CHECK CASHING CENTERS, INC.; 1 STOP CHECK CASHING $ PAYDAY & TITLE LOANS, LLC.

Florida: THE CHECK CASHING AND MONEY CENTER, INC.

Iowa: MIDWEST CHECK CASHING OF SIOUX CITY, L.C..

Minnesota: ACTION CHECK CASHING INC.

Nebraska: CASH CONNECTION CHECK CASHING, L.L.C..

New Jersey: DAK'S CHECK CASHING; NATIONAL CHECK CASHING INC..

New York: AVENUE CHECK CASHING CORP ; A V W CHECK CASHING CORP / BAY STREET CHECKING; FORTUNE CHECK CASHING; GRANITE C