The part of the article about how banks exploited black communities is sickening
– something I wrote about in my book, More Mortgage Meltdown (www.amazon.com/exec/obidos/ASIN/0470503408/tilsoncapitalpar) (see excerpt, attached):
The mayor and former bank loan officers point a finger of blame at large national banks — in particular, Wells Fargo. During the last decade, they say, these banks singled out blacks in Memphis to sell them risky high-cost mortgages and consumer loans.
The City of Memphis and Shelby County sued Wells Fargo late last year, asserting that the bank's foreclosure rate in predominantly black neighborhoods was nearly seven times that of the foreclosure rate in predominantly white neighborhoods. Other banks, including Citibank and Countrywide, foreclosed in more equal measure.
Camille Thomas, a 40-year-old African-American, loved working for Wells Fargo. "I felt like I could help people," she recalled over coffee.
As the subprime market heated up, she said, the bank pressure to move more loans — for autos, for furniture, for houses — edged into mania. "It was all about selling your units and getting your bonus," she said.
Ms. Thomas and three other Wells Fargo employees have given affidavits for the city's lawsuit against the bank, and their statements about bank practices reinforce one another.
"Your manager would say, 'Let me see your cold-call list. I want you to concentrate on these ZIP codes,' and you knew those were African-American neighborhoods," she recalled. "We were told, 'Oh, they aren't so savvy.' "
She described tricks of the trade, several of dubious legality. She said supervisors had told employees to white out incomes on loan applications and substitute higher numbers. Agents went "fishing" for customers, mailing live checks to leads. When a homeowner deposited the check, it became a high-interest loan, with a rate of 20 to 29 percent. Then bank agents tried to talk the customer into refinancing, using the house as collateral.
Several state and city regulators have placed Wells Fargo Bank in their cross hairs, and their lawsuits include similar accusations. In Illinois, the state attorney general has accused the bank of marketing high-cost loans to blacks and Latinos while selling lower-cost loans to white borrowers. John P. Relman, the Washington, D.C., lawyer handling the Memphis case, has sued Wells Fargo on behalf of the City of Baltimore, asserting that the bank systematically exploited black borrowers.
A federal judge in Baltimore dismissed that lawsuit, saying it had made overly broad claims about the damage done by Wells Fargo. City lawyers have refiled papers.
"I don't think it's going too far to say that banks are at the core of the disaster here," said Phyllis G. Betts, director of the Center for Community Building and Neighborhood Action at the University of Memphis, which has closely examined bank lending records.
Former employees say Wells Fargo loan officers marketed the most expensive loans to black applicants, even when they should have qualified for prime loans. This practice is known as reverse redlining.
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The New Poor
Blacks in Memphis Lose Decades of Economic Gains
By MICHAEL POWELL
Published: May 30, 2010
posted by Whitney Tilson at 10:24 AM
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