The start of a 2018 $150B Wells Fargo Bank Community Benenfit Agreement Request

In a companywide message, Wells Fargo Bank CEO Timothy J. Sloan said, “When we discover a problem, we are moving to find the root cause and fix it — so we can be confident we are doing all we can to build a better, stronger Wells Fargo.”

CEO Tim Sloan has had two years to fix Wells Fargo. Is he running out of time?
Wells Fargo CEO Tim Sloan testifies before the Senate Banking Committee in 2017. He’s expected to be called to testify before a House committee next year. (Alex Edelman / TNS)

Wells Fargo & Co. In 2018 launched a series of advertisements meant to rebuild trust with customers. But the ads, to pull an image from Wells Fargo’s long-ago campaigns, are putting the wagon before the horse.

The Wells Fargo account fraud scandal is one of many ongoing controversies the bank faces, this one was brought about by the creation of millions of fraudulent savings and checking accounts on behalf of Wells Fargo clients without their consent. Various regulatory bodies, including the Consumer Financial Protection Bureau (CFPB), fined the company as a result of the illegal activity, and the company faces additional civil and criminal suits.

The bank has acknowledged that it mistakenly foreclosed on hundreds of homeowners over a five-year period. Wells Fargo has also disclosed a Justice Department probe of its handling of tax credits for low-income housing projects. Furthermore, Wells Fargo bankers fudged information such as birthdays and Social Security numbers on documents for commercial customers in order to meet a regulatory deadline. That matter is now reportedly under investigation by the Justice Department.

Wells Fargo will be blocked by the US federal Reserve from adding assets to the $2T USD held on its balance-sheet at the end of 2017 through second quarter 2019. Before it lifts the asset cap, the Federal Reserve board must hold a formal vote on the matter. Two other regulators had already imposed fines and penalties soon after the misdeeds began emerging in 2016.

With regulatory fines, compliance actions, and lawsuits expected to cost the bank over $3B. Included in that estimate is the banks action on April 20 2018 when Wells Fargo agreed to pay a $1 billion fine to settle investigations related to its mortgage and auto-lending businesses. Scince September 2016, Wells Fargo’s stock has climbed about 8% while the KBW-Nasdaq Bank Index, which tracks national and large regional bank stocks, is up 38%. The bank has lost over $26B in market value becuase of these actions.

Wells Fargo & Company is an American multinational financial services company headquartered in San Francisco, California, with central offices throughout the United States. It is the world’s second-largest bank by market capitalization and the fourth largest bank in the US by total assets, with over $2T in assets. Wells Fargo is ranked #26 on the 2018 Fortune 500 rankings of the largest US corporations by total revenue.

Consumer Banking provides financial services to 21 million retail households and three million small business owners through approximately 5,500 retail branches and more than 13,000 ATMs in 36 states and the District of Columbia. It also provides home and auto lending to more than 11 million households nationwide.

Wells Fargo is more than just the organization from California. They have acquired many other financial entities over the years. One of these, Wachovia, is a North Carolina institution. And several of its subsidiaries (most notably the Bank of Charleston) owned slaves and otherwise supported and participated in the slave trade. Wachovia even issued a formal public apology in 2005 over its role in slavery, but no compensation to the African American community.

We are proposing that Wells Fargo enter into a formal ten year $150B Community Benefit Agreement in 2019 with a coalition of groups organized by Friends of the African Union (FAU). FAU’s focus is on the African Diaspora and Africa community in the markets it serves.

We understand, based on our experience with a $30B CBA signed with a bank with $300B in assets, that the heart of formal community benefits agreements is the strategy that supports community organizing and coalition building.

Organizing and maintaining a coalition, facilitating compromise and crafting a shared agenda is essential to creating a successful CBA. Coalitions can include a variety of community groups, such as neighborhood groups, environmental organizations, good-government organizations, labor unions, and faith-based organizations. Our FAU Coalitions are usually incorporated that feature an operating agreement for each member of the company to govern their relationship in the coalition.

Nearly all of the bank’s revelations over the last two years relate to practices that were in place before Sloan became CEO. He has a chance to create a historic solution to past practices and gain future business.

In 2019 we will pursue solutions based on their past history and future possibilities.

According to a report by Jon R. Campbell, Executive Vice President, Corporate Responsibility and Community Relations and Chairman of the Wells Fargo Foundation, “the Bank has made non binding statements of to originate $150 billion in new purchase loans to minority households and originate $70 billion in new purchase loans to low and moderate-income households. As far as FAU can see there is no external oversight.

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Reference Here is the Wells Fargo Board of Directors Corporate Responsibility Committee members –

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Remember, that on October 28, 2008, Wells Fargo was the recipient of US$25 billion of Emergency Economic Stabilization Act funds in the form of a preferred stock purchase by the US Treasury Department. Tests by the US Federal Government revealed that Wells Fargo needed an additional US$13.7 billion in order to remain well capitalized if the economy were to deteriorate further under stress test scenarios.

Illinois Attorney General Lisa Madigan filed suit against Wells Fargo on July 31, 2009, ten years ago, alleging that the bank steers African Americans and Hispanics into high-cost subprime loans. A Wells Fargo spokesman responded that “The policies, systems, and controls we have in place – including in Illinois – ensure race is not a factor…” An affidavit filed in the case stated that loan officers had referred to black mortgage-seekers as “mud people,” and the subprime loans as “ghetto loans.” According to Beth Jacobson, a loan officer at Wells Fargo interviewed for a report in The New York Times, “We just went right after them. Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.” The report goes on to present data from the city of Baltimore, where “more than half the properties subject to foreclosure on a Wells Fargo loan from 2005 to 2008 now stand vacant. And 71 percent of those are in predominantly black neighborhoods.” Wells Fargo agreed to pay US$125 million to subprime borrowers and US$50 million in direct down payment assistance in certain areas, for a total of US$175 million.

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