In Wake Of Wells Fargo Testimony, Media Should Be Investigating Banks, Not Blaming Housing Crisis On Minorities
Blog ››› ››› MELODY JOHNSON
A Wells Fargo whistleblower has testified that during the housing bubble, her bank steered minority loan applicants into subprime mortgages even if they actually qualified for better terms. This testimony highlights the fact that media should be investigating banks and Wall Street to determine whether their malfeasance was the leading cause of the subprime mortgage crisis rather than casting blame on minorities.
After the housing bubble burst and the nation slid into a recession, the right-wing media deflected blame from Wall Street and the banks and placed it onto minorities and the government programs that aided them. That claim was false. Economists, the Federal Reserve, and the Financial Crisis Inquiry Report all agree that minorities and these government programs are not to blame, but right-wing media have made this argument over and over, and continue to make this claim to this day.
The testimony by a whistleblower, former top-performing Wells Fargo subprime loan officer Beth Jacobson, is further evidence that the right-wing media narrative is false. According to Jacobson, because of the influence of Wall Street, her company pushed subprime loans on minorities who might have qualified for better mortgages and approved those loans even when they were clearly unaffordable.
Here's a description of what was allegedly going on at Wells Fargo:
In sworn court testimony, [Beth Jacobson] described watching loan officers comb through heavily African American areas such as Baltimore and Prince George's County, forging relationships with churches and community groups to sell their members shoddy mortgages. She says she processed loans for homeowners with sterling credit ratings with higher interest rates than they needed to pay. And she says she pumped out millions of dollars in mortgages to people with no paperwork and low incomes, becoming Wells Fargo's top-producing loan officer.
Subprime loans were so lucrative, she testified, that many of her counterparts selling traditional mortgages realized they could make more money by referring borrowers to her than by making their own loans. That meant customers were offered subprime mortgages even if they qualified for better interest rates, she said. Other times, brokers encouraged buyers not to provide a down payment or income documents, automatically funneling them into the more profitable subprime division, she said.
"There was always a big financial incentive to make a subprime loan wherever one could," Jacobson wrote in her affidavit.
Wells Fargo has strongly denied the loan officer's claim, and is currently defending a lawsuit regarding this matter. No matter where this current lawsuit against Wells Fargo leads, Wells Fargo itself, as well as other banks, have settled lawsuits alleging that they engaged in similar practices.
Wells Fargo settled a predatory lending case brought by the city of Memphis, TN for more than $432 million. Bank of America paid $335 million to settle a discrimination suit involving Countrywide Financial, which was accused of discriminating against black and Hispanic applicants during the housing boom. Furthermore, A banker for Chase Home Finance in Flordia confessed to "nudg[ing]" "less savvy borrowers -- those with less education... [and] without fluent English" toward subprime loans. Other financial entities have also settled claims that they engaged in predatory loans for hundreds of millions of dollars.
It's time for the media to do the responsible thing: investigate the banks instead of placing blame on the victims of the abuse by the banks and Wall Street.