N.J. Town Pulls Public Funds From Wells Fargo -- Update
April 24 2017 - 8:04PM
Dow Jones News
By Kate King
The city of East Orange in northern New Jersey has pulled public
funds from Wells Fargo & Co. after lawmakers accused the bank
of engaging in predatory-lending practices and exacerbating the
city's foreclosure crisis.
City officials said Wells Fargo holds 13% of the 439 mortgages
currently in foreclosure in East Orange. City councilman Chris
James said the bank forced people from their homes and then let the
vacant properties fall into disrepair.
"We can't have the city's money, that's from hard working
people's taxes, in this system," said Mr. James, a Democrat who led
the divestment push. Mr. James also pointed to Wells Fargo's
investment in the controversial Dakota Access Pipeline and last
year's revelation that bank employees had opened more than 2
million unauthorized deposit and credit card accounts to meet
ambitious sales goals as additional reasons for cutting ties with
the company.
East Orange's City Council voted in February to close all its
accounts with Wells Fargo and Mr. James said on Monday that the
city had completed the process. City officials were unable to
provide the amount of funds in question.
Other cities and states across the country have also divested
from Wells Fargo. In Seattle, council members voted in February to
pull $3 billion in public funds from the bank when its contract
with the city ends next year. Illinois said in October that it
would halt $30 billion in investment activity with Wells Fargo,
citing the sales-tactics scandal.
A spokesman for Wells Fargo said the company is committing to
boosting homeownership and to supporting "racially and ethnically
diverse home buyers." East Orange's population of about 65,000 is
89% black, according to the U.S. Census.
The spokesman also said Wells Fargo is one of 17 financial
institutions that has invested in the Dakota Access Pipeline and
its loans represent less than 5% of the total financing. He also
said the company is taking steps to fix its sales practices and
restore trust with customers.
Wells Fargo holds just under $1 billion, or 5%, of $20 billion
in deposits from New Jersey's state, local and county
governments.
Mike Affuso, director of government relations for the New Jersey
Bankers Association, said East Orange can take its funds to one of
the more than 100 other certified depositories in the state.
"The government deposit space is very robust," Mr. Affuso said.
"Consumers can do whatever they want, this is how the marketplace
works."
East Orange Mayor Lester Taylor said he supported the
divestment.
"I am committed to sending a strong message that we will not do
business nor consider doing business with any institution that
intentionally preys upon homeowners in our city," he said in a
statement.
Trina Scordo, executive director of the nonprofit organizing
group NJ Communities United, said she hopes other cities follow
East Orange's example and stop doing business with banks that
peddled toxic mortgages.
"Adjustable-rate mortgages, bubble payments, robo-signing -- all
the pieces that came along with that foreclosure crisis," Ms.
Scordo said. "It didn't just go away because people stopped talking
about it."
Mr. James, the East Orange councilman, acknowledged that Wells
Fargo wasn't the only bank accused of predatory lending. He said
the city is in the process of reviewing its relationships with
other banks.
Write to Kate King at Kate.King@wsj.com
(END) Dow Jones Newswires
April 24, 2017 19:49 ET (23:49 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Sep 2023 to Sep 2024