Sacramento Observer – 07-06-2005
Wells Fargo Home Mortgage, the nation’s leading originator of home loans to ethnic minority customers, has joined forces with talk show host and author, Tavis Smiley; and several financial affairs experts to provide free Wealth Building Strategies Seminars in eight cities across the country.
Additional seminars featuring other popular panelists also will be offered in 12 more cities, nationwide.
Wells Fargo is in the center of a lawsuit alleging the bank pushed high-risk mortgages to minorities. Mortgages which disproportionally have failed. According to legal documents and studies, Wells Fargo pushed black applicants into high-risk mortgages, even if their credit scores merited much lower interest rate traditional loans. Loan documents may have been falsified to grant loans to people who otherwise would not have qualified. According tot he Baltimore Sun as reported by TPM –
During the subprime bubble which burst in 2007, Wells Fargo specifically targeted African Americans for its subprime loans, which carry a higher interest rate and are more lucrative for the company than standard loans:
– For instance, according to the sworn affidavit filed by one of the former loan officers, Tony Paschal (himself African-American), Wells Fargo was so focused on pitching subprimes to African-Americans that, until 2006, loan officers’ computers had software that allowed them to print out flyers in the language “African-American.” It’s unclear how the language of the resulting flyer differed from English.
– In her sworn affidavit, Beth Jacobson, the former loan officer, writes: “I remember managers saying that they felt ‘so lucky to have [Prince George’s] County because it is the subprime capitol (sic) of Maryland.’ ” Prince George’s County is heavily African-American.
– According to Jacobson, Wells Fargo used black loan officers to go into black churches in Baltimore to do presentations about loans. It also ran “wealth building” seminars targeted at black people for “alternative lending,” which was the company’s code for subprime lending.” Jacobson was told she was “too white” to lead these seminars. When she complained, she got no response.
Which gets us the Tavis Smiley’s role. The Washington Independent is reporting a lawsuit alleging that Wells Fargo used Tavis to target black borrowers, and to fool them into taking subprime loans in the series of seminars reported by the Sacramento Observer above.
As the housing market began booming in mid-2000, Wells Fargo & Co. teamed up with prominent African American commentator and PBS talk show host Tavis Smiley and financial author Kelvin Boston, the host of “Moneywise,” a multicultural financial affairs show, to host something called “Wealth Building” seminars in black neighborhoods.
Smiley was the keynote speaker, and the big draw, according to Boston and Keith Corbett, executive vice president of the Center for Responsible Lending, who attended two of the seminars. Smiley would charge up the audience — and rattle the Wells Fargo executives in attendance — by launching into a story about how he hated banks, and how they used to refuse to lend him money for his real estate projects in Compton, Calif., and elsewhere. After Hurricane Katrina, Smiley also emphasized the importance of building assets and wealth, saying those who had done so were able to leave New Orleans, while people with nothing had to stay behind, Boston said.
“My spiel was the financial planning process, how you want to be able to save and invest for the future, and to have a plan of action,” Boston said. “Then Tavis talked about his experiences with the banks, and how people should be thinking about some real estate.”
The seminars in some cities drew standing room only crowds, with numerous Wells Fargo representatives on hand, seated at carrels to meet one-on-one with potential borrowers who lined up after the speeches, which were usually held in hotels. The free, day-long events were heavily advertised in the black media, and launched in eight cities, including Baltimore, Chicago, Richmond, Va., and San Francisco.
But what appeared on the surface as a way to help black borrowers build wealth was actually just the opposite, according to a little-noticed explanation of the “Wealth Building” seminar strategy, contained in a lawsuit recently filed by Illinois Attorney General Lisa Madigan.
Wells’ plan for the seminars all along was to target black borrowers for higher-cost subprime mortgages, not for wealth-building, the suit charged. And the seminars were a part of the bank’s overall illegal and discriminatory practice of steering black and Hispanic borrowers into riskier and more expensive loans, the suit said.
“According to a former Wells Fargo Home Mortgage employee, one of these ‘Wealth Building’ seminars held in Maryland was planned for an audience that would be virtually all African American,” the suit said. “The plan for the seminar was for Wells Fargo Home Mortgage employees to talk about subprime mortgages, although they were directed by Wells Fargo Home Mortgage to use the term ‘alternative lending’ when marketing these products.”
The former employee, who is white, was scheduled to speak at the seminar, but was told by a manager that she was “too white,” and that only black employees could make presentations, the suit said.
In a city of Baltimore lawsuit against Wells, former employees charged that Wells Fargo loan officers referred to minority borrowers as “mud people” and called subprime mortgages “ghetto loans.” But some prominent black bloggers find the “wealth building” seminars just as egregious, and question why Smiley, Boston, and anyone else who participated in them hasn’t been called on further to account for their actions.
So… The question is whether Tavis was a “Useful Fool”, or a willing participant? And why didn’t Tavis, and especially Kevin Boston who is supposed to be an expert in managing money know about what the bank was really doing?
Tavis (and Kevin) got some ‘splaining to do.