6 Reasons to stop supporting Wells Fargo

Time and time again, Wells Fargo and other big banks have profited at the cost of our communities. They’ve been getting away with it for too long. It’s time to take the reins from Wells Fargo and have our communities steer us in the right direction.

Wells Fargo’s predatory lending practices contributed to the economic collapse. But during recent protests against the big banks in Portland, Oregon, Wells Fargo regional president Don Pearson “reject[ed] the notion that his industry is culpable for any of the nation’s economic misfortunes,” Instead, banks refuse to work with homeowners to modify their loans, choosing to take their homes.

Click here to listen to some first hand stories of Oregonians who have dealt with Wells Fargo.

Banks that are too big to fail are really just too big to be sustainable. They continue to push their weight around putting profits ahead of the needs of the community.

Here are 6 reasons why Wells Fargo is a bad actor in our community.

Foreclosure
One of the worst players in the housing crisis that led to the economic collapse, Wells Fargo is well known for its predatory sub-prime lending^[1] and its unwillingness to work with homeowners once the crisis hit.^[2] Wells Fargo’s actions have resulted in foreclosed homes and blighted communities.

Unemployment
Despite record profits and bailout money,  Wells Fargo has not created any new jobs, instead choosing to increase its profits by cutting jobs.^[3]

Wages, Benefits and CEO Salaries
While the average American yearly salary is $41,673.83,^[4] Wells Fargo CEO John Stumpf made over $17 million in 2010.^[5] In 2011, the Bank had one of its most profitable years by earning $15 billion in net income.^[6] This even during the housing crisis they helped create. They continue to cut employee wages and benefits in their aggressive pursuit of profits.^[7]

Immigration
Wells Fargo is one of the largest investors in the GEO Group, Inc.^[8] — one of the two largest private prison companies in the U.S.^[9] GEO Group supported and lobbied for Arizona’s HB 1070 law which is one of the worst anti-immigrant laws in the country.^[10]

Communities of Color
Before the Housing crisis hit, Wells Fargo was targeting communities of color for their “ghetto loans” or sub-prime loans.^[11]

Tax dodging
Unlike most taxpayers, Wells Fargo isn’t paying its fair share. In fact, in 2010, our tax dollars went to paying a $4.42 billion federal tax refund to Wells Fargo, $54 million of which came from Oregon taxpayers.^[12] If Wells Fargo had paid its fair share, that money could have paid for hundreds of jobs, medicare coverage, housing assistance and other essential services that we’re being told have to be cut.

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[1] In July 2011, the Federal Reserve imposed a record $85 million fine on Wells Fargo for “allegedly pushing borrowers with good credit into expensive mortgages and falsifying loan applications.” Ben Rooney, Fed hits Wells Fargo with $85 million fine, CNN Money, July 20, 2011, available at http://money.cnn.com/2011/07/20/news/companies/wells_fargo_fined/index.htm (last accessed Jan. 20, 2012).

[2] Suzanne Manneh and Ngoc Nguyen, Foreclosed Homeowners Vent Anger at Wells Fargo, New America Media, May 4, 2011, available at http://newamericamedia.org/2011/05/foreclosed-homeowners-vent-anger-at-wells-fargo.php (last accessed Jan. 20, 2012). See also Andrew Cohen, Justice Foreclosed, The Atlantic, July 25, 2011, available at http://www.theatlantic.com/national/archive/2011/07/justice-foreclosed/242407/ (last accessed Jan. 20, 2012).

[3] The goal of Wells Fargo’s efficiency program, Project Compass, is to aggressively cut jobs to reduce its operating expenses by $1.5 billion. Wells Fargo plans layoffs, Yahoo! Finance, November 22, 2011, available at http://finance.yahoo.com/news/Wells-Fargo-Plans-Layoffs-zacks-1940186693.html (last accessed Jan. 20, 2012).

[4] National Average Wage Index, Social Security Administration Online, available at http://www.ssa.gov/oact/COLA/AWI.html (last accessed Jan. 20, 2012)

[5] Wells Fargo & Company, Proxy Statement (Form DEF 14A), at 74 (March 21, 2011).

[6] New York Times Market Analysis Tool, available at http://markets.on.nytimes.com/research/stocks/fundamentals/fundamentals.asp?symbol=WFC (last accessed January 20, 2012).

[7] “[E]levated mortgage expenses were more than offset by lower employee compensation and benefits in the quarter.” DBRS Comments on Wells Fargo & Company 2Q11 Earnings – Senior at AA Unchanged, DBRS, July 25, 2011, available at http://www.dbrs.com/research/241107/dbrs-comments-on-wells-fargo-company-2q11-earnings-senior-at-aa-unchanged.html (last accessed Jan. 20, 2012). See also Wells Fargo’s Project Compass points to $1.5B in expense cuts, San Francisco Business Times, July 19, 2011, available at http://www.bizjournals.com/sanfrancisco/news/2011/07/19/wells-fargo-bank-wachovia-earnings.html (last accessed Jan. 20, 2012).

[8] The GEO Group, Inc. Common Stock – Major Holders, Yahoo! Finance, available at http://finance.yahoo.com/q/mh?s=GEO+Major+Holders (last accessed Jan. 20, 2012).

[9] The Corrections Corporation of America (CCA) and the GEO Group, Inc. control the national private prison system, and together “they have a combined profit of more than $5bn a year.” Axel Caballero, Alabama brings back slavery for Latinos, The Guardian UK, October 12, 2011, available at http://www.guardian.co.uk/commentisfree/cifamerica/2011/oct/12/alabama-slavery-latino-immigrants (last accessed Jan. 20, 2012).

[10] Eric W. Dolan, Wells Fargo takes heat over investments in private prison industry, The Raw Story, November 10, 2011, available at http://www.rawstory.com/rs/2011/11/10/group-calls-on-wells-fargo-to-come-clean-about-private-prison-investments/ (last accessed Jan. 30, 2012)

[11] “Ghetto loans” allegedly target minorities, CNN Online, June 11, 2009, available at http://am.blogs.cnn.com/2009/06/11/reverse-redlining/ (last accessed Jan. 20, 2012).

[12] Corporate Taxpayers and Corporate Tax Dodgers 2008-10, Citizens for Tax Justice, November 2011, available at http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf

Category: Actions, Banks, Community, Featured, Foreclosure, Wells Fargo