Wells Fargo has agreed to settle a lawsuit alleging discrimination in loan approvals.
Banking Dive reports that a lawsuit combining multiple cases, filed by Wells Fargo shareholders in federal court in Northern California, accuses the bank giant of approving fewer than 50% of refinancing applications for Black borrowers in 2020. The banker was also accused of conducting fake job interviews with nonwhite candidates in order to meet diversity goals, as AFROTECH™ previously reported.
Shareholders argue that the bank’s board of directors breached its fiduciary duties regarding Wells Fargo’s regarding the bank’s discriminatory hiring and lending practices, according to a press release shared by the office of Cotchett, Pitre & McCarthy, which served as court-appointed co-lead counsel and was represented by lawyers Mark Molumphy, Tyson Redenbarger, Gia Jung, and Elle Lewis.
Wells Fargo has agreed to a $110 million settlement. Of that amount, $100 million will be put toward a Borrower Assistance Fund to ensure low- and moderate-income borrowers receive mortgage assistance in an effort to establish a “more inclusive housing system,” per the office of Cotchett, Pitre & McCarthy. In addition, insurers for the defendants’ board of directors will pay $10 million to Wells Fargo.
The settlement was approved by Judge Trina Thompson of the United States District Court in the Northern District of California, according to Banking Dive.
“This program at least provides an exceptional amount of hope for a lot of people who did not think the American dream would be available to them under these economic times … I applaud each of you in your creativity and the historical moment you have just created … I think this is a win-win for everybody,” Judge Thompson said in the court hearing, according to the office of Cotchett, Pitre & McCarthy.
“Taken together, these developments suggest a more comprehensive strategy: one that aligns external financial inclusion with internal institutional change. If implemented consistently and with accountability, these efforts can help repair relationships with marginalized communities and set a stronger precedent for the financial sector at large,” Judge Thompson later added. “While continued monitoring, community engagement, and measurable benchmarks will be key to evaluating the program’s long-term success, this initiative marks an encouraging move toward a more inclusive and responsible banking framework.”
