Good morning. I’m pleased to be joined by Assistant Attorney General for the Civil Rights Division, Tom Perez; Illinois Attorney General, Lisa Madigan; and Comptroller of the Currency, Thomas Curry – to announce the latest step forward in our ongoing efforts to protect American consumers, to ensure fair treatment for struggling borrowers, and to seek justice – and recover losses – for victims of discriminatory lending practices.
Today, the Department of Justice reached a significant settlement – totaling at least $175 million – with Wells Fargo Bank, the nation’s largest originator of residential home mortgages. This settlement constitutes the second-largest fair lending settlement ever reached by the Department. And it will resolve the government’s allegations that, from 2004 through 2009, Wells Fargo engaged in discriminatory lending practices against qualified African-American and Hispanic borrowers – thereby violating the Equal Credit Opportunity Act and the Fair Housing Act. These activities took place in at least 82 geographic markets across 36 states and the District of Columbia.
As a result of investigations conducted by the Justice Department and the Treasury Department’s Office of the Comptroller of the Currency, systemic discrimination was discovered in Wells Fargo’s lending practices. This resulted in more than 34,000 African American and Hispanic wholesale borrowers paying an increased rate for loans simply due to the color of their skin – including approximately 4,000 African-American and Hispanic wholesale borrowers who were steered into subprime mortgages.
Under the terms of the settlement filed today, these victims will be able to receive the much-needed relief they deserve. As part of the agreement – which is subject to the U.S. District Court’s approval – Wells Fargo will provide $125 million in compensation to those wholesale borrowers who were victimized by its widespread practice of charging higher fees and rates to non-white borrowers. The bank will provide another $50 million in direct payments for down payment assistance to residents within eight metropolitan areas where the bank’s discriminatory practices had a significant impact. And Wells Fargo also has agreed to injunctive relief, monitoring, and an internal review of its retail mortgage lending practices – with additional compensation for minority borrowers who received subprime loans from its retail division while white borrowers with similar credit profiles were offered prime loans.
The Department’s action makes clear that we will hold financial institutions accountable, including some of the nation’s largest, for lending discrimination. An applicant’s creditworthiness, and not the color of his or her skin, should determine what loans a borrower qualifies for. With today’s settlement, the federal government will ensure that African-American and Hispanic borrowers who were discriminated against will be entitled to compensation and borrowers in communities hit hard by this housing crisis will have an opportunity to access homeownership.
Put simply, there is no place for discriminatory lending in the marketplace, and it will not be tolerated by this Justice Department. In fact, today’s settlement marks the second time in just seven months that the Department has taken action to bring relief to borrowers who were steered into subprime loans based on their race or national origin. And it underscores our unwavering determination to work closely with our law enforcement allies and government partners in order to hold lenders accountable for unfair and unlawful practices – whenever and wherever they may occur.
In recent years, this commitment has led the Department – and, specifically, the Civil Right's Division's Fair Lending Unit – to aggressively combat bias, thwart discrimination, and work to restore confidence in our housing and lending markets. Since its establishment less than 18 months ago, the Fair Lending Unit has filed or resolved a record number of fair lending matters. As a result of this work, we are sending an unmistakable message: that this Justice Department will use every authority, tool, and resource at our disposal to ensure fair access to credit for all; to enforce essential consumer protections; and to safeguard the rights, and best interests, of every American.
Thanks to our reinvigorated efforts, the critical interagency partnerships we’ve strengthened with banking regulatory agencies, and initiatives such as the President’s Financial Fraud Enforcement Task Force – we can all be proud of the results we’ve obtained, and the progress that’s currently underway. And there’s no question that we stand poised to take this work to a new level.
I want to thank every support staffer, investigator, and attorney – from the Justice Department; the Illinois Attorney General’s Office – under the outstanding leadership of Attorney General Madigan; the Office of the United States Attorney for the District of Columbia, Ron Machen; and, in particular, the Office of the Comptroller of the Currency, which initially launched this investigation before referring it to the Justice Department in 2010. It was their tireless efforts that brought about this settlement and made today’s announcement possible. I’d also like to acknowledge Wells Fargo’s cooperation in reaching this agreement with the Department, and its commitment to correcting course by implementing stronger fair lending policies and controls to ensure that such unacceptable behavior does not occur again. And, now, I’d like to turn things over to another key leader in this work – my good friend Tom Perez – who will provide additional details.