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The Justice Department announced Thursday it had settled mortgage discrimination charges with Wells Fargo, the nation's largest home mortgage lender. Under the settlement, Wells Fargo will pay $175 million to 34,000 individuals who were discriminated against in the mortgage application process. The news garnered considerable print media coverage, but only a brief mention on one network newscast. ABC World News (7/12, story 6, 0:50, Sawyer) reported, “The bank is settling a charge that they discriminated against minorities seeking loans. Specifically, that qualified African-American and Hispanic borrowers were given higher mortgage rates and steered towards riskier subprime mortgages solely because of the color of their skin. On average, those with the subprime mortgages will receive $15,000 from this settlement. Those charged the higher rates will receive $2,000. Wells Fargo continues to deny any wrong doing.” The New York Times (7/12, Savage, Subscription Publication) notes that the settlement “would be the second largest residential fair-lending settlement in the department's history.” It adds an investigation by Justice's Civil Rights Division found “mortgage brokers working with Wells Fargo had charged higher fees and rates to more than 30,000 minority borrowers across the country than they had to white borrowers who posed the same credit risk.” The Los Angeles Times (7/13, Reckard) reports that the government complaint said that of those minority borrowers who were overcharged or wrongly steered into loans with disadvantageous terms, “about 4,500 were in the Los Angeles area — the most of any area in the country. The Justice Department said it had found 4,100 alleged victims in the Miami metropolitan area, 4,000 in greater New York, 3,500 in Washington, D.C., and its suburbs and 3,200 in the Chicago area.” WSJournal blasts bias allegations. The Wall Street Journal (7/13, Subscription Publication) editorializes that Wells Fargo did nothing wrong, and argues that the Justice Department provided no evidence of intentional discrimination by race, but instead depended on a statistical sample of Wells Fargo loans in determining bias by a disparate-impact analysis which does not account for bargaining between lender and applicant |
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