There is a piece in the New York Times today is reporting on their investigation into the explicitly racist practices of Wells Fargo in their subprime mortgage business ( photo credit: TheTruthAbout… , h/t Schiffon Wong). According to the NYTimes, Wells Fargo created a unit in the mid-Atlantic region to push expensive refinancing loans on black customers, particularly those living in Baltimore, southeast Washington and Prince George’s County, Md.
According to a former employee of the banking giant quoted in the article, the company viewed the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as “mud people” and to subprime lending as “ghetto loans.” The employee, a Ms. Jacobson, who is white and said she was once the bank’s top-producing subprime loan officer nationally, goes on to reveal:
“We just went right after them. Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”
The NYTimes backs this anecdotal evidence with their own more systematic investigation:
The New York Times, in a recent analysis of mortgage lending in New York City, found that black households making more than $68,000 a year were nearly five times as likely to hold high-interest subprime mortgages as whites of similar or even lower incomes. (The disparity was greater for Wells Fargo borrowers, as 2 percent of whites in that income group hold subprime loans and 16.1 percent of blacks.)
To understand the Wells Fargo case, it’s important to understand the broader context of this banking institutions’ policies as part of a larger pattern.
Sociologists Doug Massey and Nancy Denton in their ASA-award-winning book, American Apartheid, document the systematic pattern of housing discrimination in the U.S., as well as the dire consequences of such enforced segregation. Part of Massey and Denton’s argument is that segregation in housing leads to “social dislocations” (William J. Wilson’s term) in other areas like high school drop-out rates, increased rates of drug use, delinquency and crime, in other words, “the making of an underclass” (the subtitle of their book).
Massey and Denton’s work was path-breaking for the way that it clearly and painstakingly documents the “construction of the ghetto,” but their findings were not exactly new. The Kerner Commission Report from 1968 famously concluded:
“What white Americans have never fully understood— but what the Negro can never forget— is that white society is deeply implicated in the ghetto. White institutions created it, white institutions maintain it, and white society condones it.”
The report from today’s NYTimes and the evidence of explicitly racist practices of Wells Fargo do not mean that everyone that worked there agreed with these policies or harbored explicitly racist views. Indeed, as Eduardo Bonilla-Silva as recounted in his Racism Without Racists, the continued operation of white supremacist system does not require the presence of extreme racists in that system. In fact, I’m sure that many of the people that worked at Wells Fargo would never consider themselves racists but rather well-meaning and liberal in their views on race.
So, then it becomes necessary to understand Wells Fargo’s banking discrimination — and the housing segregation such discrimination creates — within an even broader context. For that, it’s important to understand the white racial frame that sustains systemic racism, as Joe has described here and in his important book by the same name. Note the loan officer mentioned in the NYTimes piece that referred to blacks as “mud people” and to the subprime lending as “ghetto loans.” These statements reflect thinking within the white racial frame and the result is the maintenance of systemic racial segregation in housing and further economic devastation of black families that might otherwise be homeowners.
That’s the real tragedy of this story, to my thinking. Families that worked hard, tried to buy a home and provide a better life for their kids, are now facing foreclosure – and maybe worse – because of the systematic racism in Wells Fargo’s banking practices. The question really becomes then if we, as a nation, are so “tragically bound to that starless midnight of racism,” as Dr. King said, that we can never move beyond it. It’s time, I think, to begin holding institutions accountable for racist practices like these.