New York City shuns Wells Fargo over discrimination claims

New York City won’t open new depository accounts with Wells Fargo in response to mounting allegations of discrimination against Black homeowners, municipal leaders said.

The bank is facing several civil suits, and was the subject of a Bloomberg report which alleged that, among other discrepancies, that the bank rejected over half of Black applicants seeking to refinance in 2020, while approving 71% of white applicants. New York City Mayor Eric Adams and comptroller Brad Lander, in a letter to Wells Fargo President and CEO Charles Scharf, said these allegations required a swift response.

“In light of this persisting track record of discrimination, New York City will not be opening any new depository accounts with Wells Fargo Bank, N.A. as we continue to investigate these troubling findings,” the letter said.

No municipal agency currently has deposit accounts open with Wells Fargo, according to the city. New York City and Wells Fargo have been at odds over similar issues in the past. The city took the lender off its designated banking list in 2017 after Wells received a Community Reinvestment Act rating of “needs improvement.” Following an improvement in its rating, the bank was added back onto the list in 2021 after a contested vote.

Wells Fargo did not immediately respond to a request for comment. Officials said the bank has opened up a dialog about the concerns with the city.

Black homeowners have filed federal lawsuits against Wells Fargo in the past two months over discriminatory practices, with one affected borrower alleging that the bank engaged in “modern-day redlining.” The bank’s lending practices have also drawn scrutiny from federal lawmakers.

Wells Fargo denied wrongdoing in response to the Bloomberg findings and said that credit scores and other factors accounted for disparities in approval rates. The bank also defended its underwriting practices in response to a federal suit filed in March while declining to comment on the litigation itself.

“The fact is, Wells Fargo helped more Black homeowners refinance their mortgages in 2020 than any of the other largest bank lenders and the 83% increase in our refinance loans to Black homeowners in 2020 compared with 2019 was by far the biggest gain among those banks,” Wells Fargo said in a statement last month.

The bank has a history of lawsuits and settlements regarding allegations of discriminatory practices against minority borrowers. Those include a nine-figure settlement in 2013 over a U.S. Department of Justice suit regarding Black and Hispanic borrowers, and a $10 million settlement in 2019 with the City of Philadelphia over allegations the bank made it harder for minority homebrewers to refinance their mortgages.

“I look forward to the day Wells Fargo faces true accountability,” said Justin Brannan, New York City councilmember and chair of the Committee on Finance. “For now, the only moral choice for New York City is to do its banking elsewhere.”