A home mortgage office in Springfield, Illinois. (AP Photo/Seth Perlman)
You can’t talk about poverty without talking about the practices of the big banks, including their continuing refusal to stem the foreclosure crisis through mortgage principal reductions.
Consider this: Latinos lost 66 percent of their household wealth after the housing bubble burst, and African-American households lost 53 percent. Nearly 12 million families—disproportionately people of color—have either lost their homes or are currently in foreclosure, and another 16 million are underwater, owing more on their mortgages than their homes are worth.
Communities are decimated by boarded up houses and vacant lots, declining property values and the consequent loss of state and local revenues, and fewer opportunities to weather and recover from financial hardship. A new study from the Urban Institute indicates that white families now average six times the wealth of African-American and Latino families.
So when US Bank executives fled Minneapolis two weeks ago to hold their annual shareholders meeting in what they believed would be friendlier confines in Boise, it was important that activists from Minnesota and Oregon traveled to join Idahoans in an effort to hold the bank accountable. Then last week, Wells Fargo bankers traveled from San Francisco to Salt Lake City for their shareholders meeting, and activists again weren’t deterred—they came from California, Colorado and New York to stand with local groups and protest the bank’s practices.
“Wells Fargo moved the shareholders meeting to Salt Lake because last year there were 3,000 people in the streets in San Francisco,” said Maurice Weeks, campaign coordinator for the Alliance of Californians for Community Empowerment (ACCE), which had fifteen members make the eleven-hour trip to Utah. “We wanted them to know that they can’t hide from us.”
ACCE members attended the shareholders meeting as legal proxies. They were joined by members of the Neighborhood Economic Development Advocacy Project (NEDAP) from New York, the Colorado Student Power Alliance and local groups from Salt Lake City that were focused on Wells Fargo’s investments in private prisons and the impact on communities of color.
Several ACCE members in attendance were facing immediate foreclosures and welcomed the opportunity to tell Wells Fargo CEO John Stumpf—who was paid $22.87 million last year, more than any other banker—that they hadn’t been given a fair shake.
“We’re talking about folks who could pay their mortgages and stay in their houses with a modification, and Wells refuses,” said Weeks. “We’ve had situations where a HUD counselor tells our members that they qualify and Wells still denies a modification.”
More broadly, ACCE was there to demand that Wells commit to pursuing principal reductions—reducing the amount owed on a mortgage so that it reflects the fair market value of the property—wherever they are legally able to do so. A recent report from ACCE, the Center for Popular Democracy and the Home Defenders League suggests that foreclosing on the more than 11,600 California homes currently in Wells’s foreclosure pipeline—which are concentrated in poor and non-white communities—would cost the state approximately $3.3 billion due to the decreased value of the foreclosed properties, decreased value of homes in the surrounding communities and lost tax revenues. In contrast, a comprehensive program of principal reduction would stabilize households, increase tax revenues and boost the economic vitality of distressed communities. (Modifications also happen to be better for the investors who hold the mortgage, but unfortunately banks that service the mortgages—like Wells Fargo—can often make more money by foreclosing.)
A second key demand by ACCE members was that Wells Fargo report its data on principal reductions, short sales and foreclosures by race, income and zip code. Last year, the bank reached a $175 million settlement with the Department of Justice for allegedly charging African-American and Latino borrowers higher rates and fees and steering them into subprime loans when they should have qualified for regular loans.
“Our members want to make sure Wells isn’t still preying on communities of color,” said Weeks.
NEDAC presented a resolution for an independent investigation of Wells Fargo’s business practices in order to ensure that they don’t violate any fair lending or fair mortgage laws. Although the resolution was voted down, Weeks said it received more discussion than any other resolution presented to the shareholders.
“ACCE members—but also people we didn’t know—were all voicing concerns about Wells Fargo’s mortgage practices,” said Weeks.
According to Weeks, when Stumpf tried to move onto “business as usual,” Makayla Major, an ACCE member from East Oakland, stood up and shouted, “John Stumpf, you’re a liar and a crook. You are stealing too many homes in my neighborhood!” Weeks said that the room was lined with “forty or fifty” security guards and that “six or seven” immediately moved in to “make her be quiet.”
Then ACCE member Manuela Alvarez—who has been trying unsuccessfully to modify her subprime loan since her husband was injured on the job—said, “You are trying to steal my home, like you’ve stolen the homes of tens of thousands of other hard-working families. It’s time for you to be held accountable!”
She, too, was quickly surrounded by security.
ACCE member Melvin Willis then began reading a “Citizens Arrest Warrant” for Stumpf for “the following crimes: illegally foreclosing on millions of homeowners nationwide; intentionally targeting communities of color with predatory, high-cost loans; and gouging students with predatory student loans—usury.”
“He was immediately swarmed and at that point we were all escorted out of the room and the hotel,” said Weeks. “But John Stumpf and the shareholders definitely heard our message, and we made it clear that they can’t ignore these issues.”
Wells Fargo made $19 billion in profits last year and record profits last quarter. None of this would have been possible without the bank bailout and continued borrowing of taxpayer money at zero percent interest from the Federal Reserve (which Wells Fargo and the other big banks then turn around and loan to state and local governments at much higher rates).
ACCE and its allies showed up in Salt Lake City to take a stand against a wealth-stripping machine. There will be more actions ahead against Bank of America (May 9), Sallie Mae (May 30) and Walmart (June 7). Sign up to stay informed here.
“The message from the banks is that the foreclosure crisis is over, and a lot of the general public is hearing that,” said Weeks. “But we see on the ground that that’s far from true, and that Wells Fargo continues to profit at the expense of our communities. That’s why we’re keeping up the pressure of this campaign. We’re going to fight for our communities as hard as we possibly can.”
Why do Bangladeshi factory fires keep happening? Just ask the Western free-traders-gone-wild, William Greider writes.