By Matthew R. Lee
SOUTH BRONX, July 21 -- After being presented with evidence of Wells Fargo's predatory lending for years, but nevertheless approving all of Wells Fargo's merger applications, the Federal Reserve this week belatedly imposed a $85 million fine for abuses by Wells Fargo Financial.
The response by Bronx-based Fair Finance Watch, which provided the Fed with testimony for whistleblowing employees of Wells Fargo Financial, was too little, too late.
At Wells, subprime lending has already been shifted into other of the bank's units.
In 2010, the sixth year in which the Home Mortgage Disclosure Act data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields, the data show that the largest of Wells Fargo's many HMDA data reporters confined African Americans to higher-cost loans 2.56 times more frequently than whites.
Predatory lending already triggered the global financial meltdown. The Fed, it seems, is merely saving face.
But what can be learned for the future? Also this week, the Fed published notice of the proposal by another much-maligned lender, Capital One, to acquire the Internet bank ING Direct, stating that the public has only until August 18 to comment on the application. It is the middle of summer; the deal would create the nation's fifth largest bank.
One can imagine the Fed trying to haul off and approve Capital One's application, and then some years later impose some sort of fine. That makes no sense, particularly after the Fed's implicit recognition that it miss the boat for years with Wells Fargo. So let it be different this time.
