Opinion

Community leaders call for a stand against Wells Fargo

To David Wheaton, Kate Walker and the Macalester Administration:

As representatives of community organizations working for social justice in Minnesota, we were looking forward to meeting with you and KWOC students this past Monday to discuss Macalester’s banking relationship with Wells Fargo. We are disappointed that it was canceled and are using this letter to convey some of the information we had planned to share with you at the meeting. We would welcome an opportunity to reschedule the meeting to have a fuller exchange of ideas and information.

Wells Fargo’s business practices embody the opposite of Macalester’s values as a socially responsible civic leader and an institution strongly rooted in the community. Macalester should consider ending its banking relationship with Wells Fargo and initiating one with a community bank more aligned with its values.
Wells Fargo is the largest mortgage servicer in the country and in Minnesota. It was a major player in the subprime mortgage crisis that triggered the Great Recession and then exacerbated it with abysmal mortgage servicing and foreclosure practices. As if that weren’t enough, at the same time Wells Fargo benefited from billions in taxpayer bailouts, it was dodging more taxes than almost any other American corporation.
We are grateful that KWOC is partnering with our community organizations to demand big banks like Wells Fargo fix what they broke by reducing principal on underwater mortgages. Many economists agree principal reduction is the best way to stop the foreclosure crisis and help the economy.[1]

Academic Excellence

If Wells Fargo were a student, it would flunk out of school. In 2011, federal regulators found “unsafe and unsound” mortgage servicing and foreclosure practices at many large mortgage servicers. The deficient practices they found at Wells Fargo include: robo-signing affidavits and mortgage documents; initiating foreclosure proceedings without making sure the promissory note was held by the appropriate party; failing to devote enough resources to ensure proper administration of foreclosure processes; and failing to provide sufficient oversight of third parties handling foreclosure-related services.[2]

Multiculturalism

Wells Fargo’s lending practices show a pattern of subprime lending with disparate impacts on people of color.[3] In Minneapolis from 2005-2009, Wells Fargo was 4.8 times as likely to make subprime loans to African-American borrowers as white borrowers. Latinos were 2.4 times as likely as whites to receive a subprime loan from Wells Fargo.[4] This is in a community that already has some of the worst racial employment and educational achievement disparities in the country.

Civic Engagement

Wells Fargo was revealed as the biggest tax dodger in a study of 280 of America’s largest and most profitable corporations from 2008-2010.[5] Over those three years, Wells Fargo made a $49.4 billion profit and received a $680.8 million tax rebate for an effective tax rate of -1.4% over those three years. If Wells Fargo had paid the full 35% federal corporate income tax rate, it would have paid $17.3 billion in taxes. The difference between what they paid and the full tax rate is an effective tax subsidy of $17.9 billion. It would take a lot of volunteer hours at the soup kitchen to make up for that.

Internationalism

One of the ways Wells Fargo avoids taxes is to send some of its profits on extended study abroad trips to tax havens like Barbados, the Cayman Islands, Hong Kong and Mauritius.[6]

Macalester students make invaluable contributions to the Twin Cities community through their internships, scholarship and activism. We are particularly impressed with KWOC students’ tireless organizing and commitment to hold institutions accountable and empower others to do the same.

The foreclosure crisis continues to cause untold pain and expense to countless homeowners, their families, and our neighborhoods and communities. 141,239 Minnesotans have lost their homes since 2008, and our foreclosure levels are still three times higher than they were before the housing crash.[7] Foreclosures have cost Minnesotans over $20 billion in lost home value and our local governments $1.5 billion in foreclosure-related expenses.[8]

School divestment campaigns have historically lent success to movements for social justice. This is especially true of Macalester. We have faith that you will continue to work with KWOC to make Macalester a community leader by doing business with banks that strengthen, instead of weaken, the communities in which they operate.

Sincerely,

Melissa Hysing ‘01, Minnesotans for a Fair Economy

Anthony Newby, Executive Director, Neighborhoods Organizing for Change

[1] “Fannie Mae and Freddie Mac: Homeowner Loan Forgiveness Would Save Us Money,” Huffington Post, March 23, 2012.
[2] United States of America Department of the Treasury Comptroller of the Currency. Consent Order AA-EC-11-19 in the matter of Wells Fargo Bank, N.A.
[3] “Wells Fargo pays $175 million in bias case,” Star Tribune, July 13, 2012. [4] Based on analysis of Home Mortgage Disclosure Act (HMDA) data.
[5] “Corporate Taxpayers & Corporate Tax Dodgers 2008-2010,” Citizens for Tax Justice and the Institute on Taxation and Economic Policy, November 2011.
[6] “International Taxation: Large U.S. Corporations and Federal Contractors with Subsidiaries in Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions.” United States Government Accountability Office, December 2008.
[7] Based on data from HousingLink and RealtyTrac.
[8] “The Wall Street Wrecking Ball: What Foreclosures are Costing Minnesotans and What We Can Do About It,” a report by ISAIAH, Jewish Community Action, Northside Community Reinvestment Coalition, Neighborhoods Organizing for Change, and Minnesotans for a Fair Economy. February 27, 2013.

April 12, 2013

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