Filed under: Personal Finance, Dr. Boyce Money, News
The new lawsuit includes adjustments to the language which led to a judge dismissing the complaint in the first round of legal proceedings. The company is being accused of "reverse red-lining," in which black neighborhoods were targeted for predatory loans. Standard red-lining is the historical practice of outlining certain neighborhoods that would be denied access to particular services, such as banking, grocery stores, or healthcare. The reverse red-lining concept ties to a bank's desire to pinpoint black neighborhoods to be specifically offered products that are unique to the individuals in that community. So, in other words, some bankers may have felt they were doing us a favor by offering loan products with higher interest rates. The foreclosure crisis of the last two years has made it quite evident that this is not the case.
One of the more disturbing aspects of the Wells Fargo predatory lending scheme was their use of black community leaders to gain the trust of black people. Like dictators in third world countries, pastors and public figures in the black community worked hard to persuade African Americans to believe in the bank and its lending products. The most notorious relationship was the lucrative deal signed between Wells Fargo and Tavis Smiley.
Smiley deserves credit for ending his affiliation with Wells Fargo. But he must be held accountable for not properly vetting the toxic financial products being offered to the people he claims to represent. As I discuss in my book, "Black American Money," there is a danger when we only see the bottom line of corporate affiliations without fully understanding the fine print. The fixation that some of us have on paying the bills can cause us to sell our freedom in the process. Corporate America can be a greater enemy to black social progress than the Ku Klux Klan. Therefore, all such relationships must be pursued very carefully.
The Baltimore suit against Wells Fargo is further complicated by the fact that the company is one of the title sponsors for the NAACP's latest annual convention. I was uncomfortably curious about this relationship, especially since the company became a sponsor shortly after the NAACP dropped its lawsuit against Wells Fargo for racial discrimination. I spoke on this matter with NAACP President Ben Jealous, who seemed to feel that the organization could do more good by working with Wells Fargo than by working against them. I let Ben know that I don't agree with this perspective, but friends are allowed to disagree.
Dr. Boyce Watkins is the founder of the Your Black World Coalition and a Scholarship in Action Resident of the Institute for Black Public Policy. To have Dr. Boyce commentary delivered to your email, please click here.