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The NAACP filed suit against Wells Fargo and HSBC Bank USA last week, claiming black borrowers at these institutions were more than 30% more likely to be issued a higher rate loan than white applicants with the same qualifications.
“That adds up to the biggest strip mining of working class people that this country has ever seen,” says Benjamin Jealous, president of the NAACP. “People with good credit are having their credit destroyed and are losing their homes. Even if they hold on to them, [they] are being robbed by their bank.”
The court will decide whether this case will be combined with the NAACP’s July 2007 lawsuit against Bear Stearns Residential Mortgage Corp., Chase Bank USA, Citimortgage, and GMAC Mortgage Group L.L.C., among others. The court denied the defendants’ joint motion for dismissal in January.
Upper income African Americans are more than twice as likely to receive higher cost loans from these banks as their lower income white counterparts, according to a 2007 study by the National Community Reinvestment Coalition.
When banks contribute to that disparity it “violates the Equal Credit Opportunity Act, the Fair Housing Act, and the Civil Rights Act,” says Angela Ciccolo, the NAACP interim general counsel, who is seeking injunctive relief to get banks to change their policies and practices in the future.
In response, Wells Fargo said in a statement, “The NAACP’s allegations are totally unfounded and reckless. We are proud of our lengthy record leading the industry in responsible lending practices…which makes the very thought of a discrimination claim reprehensible to us.”
Similarly, HSBC stands by its fair lending and consumer protection practices, saying that they treat “customers fairly and with integrity,” according to an HSBC spokesman.
Wells Fargo expressed dismay that the NAACP had “chosen to abandon” past discussions to develop a partnership that would benefit its constituents and communities.
“Wells Fargo was given every opportunity and every consideration and we’ve moved on from that,” Ciccolo says. “We will ask for the court to decide our claims.”
All in all, there are 14 banks being sued and many of them have received taxpayer dollars from the $787 billion government bailout of banks. While HSBC has neither applied for nor received federal bailout funds, the NAACP’s Jealous maintains they are still accountable to changing their behavior.
“Regardless of whether you are using taxpayer dollars or simply relying on the public’s trust, you have a responsibility to obey federal law and not discriminate,” Jealous says.