NEW YORK–A group of community activists is calling on the Office of the Comptroller of the Currency Tuesday to give Wells Fargo a failing grade on its upcoming Community Reinvestment Act examination, citing its lending practices in minority communities and a "usurious" payday-like loan product.
The group, which includes the California Reinvestment Coalition, NEDAP, Reinvestment Partners, and the Woodstock Institute, alleges that Wells Fargo has engaged in "abusive, fraudulent and discriminatory practices," citing several federal lawsuits and settlements as evidence of discrimination in its mortgage business, according to American Banker, an affiliate of Credit Union Journal.
Sarah Ludwig, the founder and co-director of NEDAP, in New York, said community groups have sent 2,750 letters to the OCC urging the agency to take into account "discriminatory lending practices that have devastated entire communities through the concentration of foreclosures."
Community groups believe they "have a tremendous opportunity right now," to open a dialogue with Thomas Curry, who was appointed Comptroller of the Currency in March, Ludwig said.
Mike Rizer, director of community relations and CRA risk management at Wells Fargo, called the lobbying effort by community groups a "healthy give-and-take," and "a normal, standard part of the exam process."
Wells, the No. 1 originator of home loans, received an "outstanding" rating—the highest possible —in its most recent CRA exam in 2008.
Its upcoming CRA exam will begin early next year but the lengthy exam process means the San Francisco bank won't get a rating until late 2013, Rizer told American Banker.
It is rare for banks to flunk CRA exams. Through the first 10 months of this year, the OCC handed down just 10 "needs to improve" ratings, versus 234 "satisfactory" ratings, according to the agency's website.