New York City shuns Wells Fargo over discrimination claims

New York City won’t open new depository accounts with Wells Fargo in response to mounting allegations of discrimination against Black homeowners, municipal leaders said.

The bank is facing several civil suits, and was the subject of a Bloomberg report alleging, among other discrepancies, that the bank rejected over half of Black applicants seeking to refinance in 2020, while approving 71% of white applicants. New York City Mayor Eric Adams and the city's comptroller, Brad Lander, in a letter to Wells Fargo President and CEO Charlie Scharf, said these allegations required a swift response.

“In light of this persisting track record of discrimination, New York City will not be opening any new depository accounts with Wells Fargo Bank, N.A. as we continue to investigate these troubling findings,” the letter said.

No municipal agency currently has deposit accounts open with Wells Fargo, according to the city. New York City and Wells Fargo have been at odds over similar issues in the past. The city took the lender off its designated banking list in 2017 after Wells received a Community Reinvestment Act rating of “needs improvement.” Following an improvement in its rating, the bank was added back to the list in 2021 after a contested vote.

Wells Fargo, in a statement Friday evening, said it was disappointed in city leaders’ decision to publish the letter based on the Bloomberg report and said it was disturbed by irresponsible allegations of discrimination.

“We are confident that we follow relevant GSE guidelines in our decision making and that our underwriting practices are consistently applied regardless of a customer’s race or ethnicity,” the statement said. “We do not believe that these claims are based on factual analysis.”

The bank also shared statistics regarding its lending to Black homeowners, doubling down on a defense it issued in response to a discrimination lawsuit filed in March.

"Wells Fargo helped more Black homeowners refinance their mortgages in 2020 and 2021 than any other bank," the statement said. "The 83% increase in the company’s refinance loans to Black homeowners in 2020 compared with 2019 also was by far the biggest gain among the largest banks."

Officials said the bank has opened up a dialogue about the concerns with the city.

Black homeowners have filed federal lawsuits against Wells Fargo in the past two months over discriminatory practices, with one affected borrower alleging that the bank engaged in “modern-day redlining.” The bank’s lending practices have also drawn scrutiny from federal lawmakers.

The bank has a history of lawsuits and settlements regarding allegations of discriminatory practices against minority borrowers. Those include a nine-figure settlement in 2013 over a U.S. Department of Justice suit regarding Black and Hispanic borrowers and a $10 million settlement in 2019 with the city of Philadelphia over allegations the bank made it harder for minority homebrewers to refinance their mortgages.

“I look forward to the day Wells Fargo faces true accountability,” said Justin Brannan, a New York City council member and chair of the Committee on Finance. “For now, the only moral choice for New York City is to do its banking elsewhere.”