Delegation to Deliver Demands to Wells Fargo

Colorado Progressive Coalition members and a diverse coalition of community and faith leaders will present their demands to Wells Fargo western CEO.

Denver–(ENEWSPF)–October 24, 2011.  On Monday, members of the Colorado Progressive Coalition will join with a delegation of community, union, and faith leaders in delivering three demands to Tom Honig, western regional chief executive officer for Wells Fargo, and John Stumpf, the banks chief executive officer.  The delegation hopes that the demands will open a conversation with Colorado’s largest bank and help it become more receptive to community needs.

The delegation will use the opportunity to enter into a discussion with Wells Fargo over its use of predatory lending practices, dearth of home mortgage modifications and a need for continued expansion of its lending to small businesses. With 140,000 foreclosures expected between 2009 and 2012 in Colorado alone, CPC members and others are offering answers to middle-class concerns.

The demands, which they plan on asking the Colorado Wells Fargo branch to fax to its CEO, are simple but poignant. The delegation will ask Wells Fargo to “pay us back and pay your fair share”, “help stabilize the housing market while revitalizing the economy” and “invest in American jobs.”

The delegation will ask that Wells Fargo answer their demands by paying its federally mandated 35 percent tax rate, reduce the principle of underwater loans to their true market value, divest from for profit prisons such as GEO and expand small business lending to spur economic activity.

The Demands:

Paying the federally mandated 35 percent tax rate

Concerned by Wells Fargo’s payment of $27.2 billion in bonuses and compensation to its bankers while paying only $1.4 billion in federal income tax in 2010, the delegation is calling on Colorado’s biggest bank to pay back taxpayers. Delegation members are asking Wells Fargo to pay back the community before giving Stumph another $17.5 million in total compensation, as they did in 2010, by paying their federally mandated 35 percent federal corporate income tax rate instead of an effective rate of 7.5 percent that it paid in 2010. 

Over the last ten years, Wells Fargo had the lowest tax rate of the five largest world banks, paying only 24.8 percent on $110.9 billion in earnings while reportedly paying nothing in 2009 after writing off Wachovia debt. With Colorado forced to cut millions of dollars in vital resources to education, members of the community are concerned that Colorado children are being shortchanged in favor of bonuses to millionaires.

Reduce the principle of underwater loans

  • With an unemployment rate in Colorado still at historical highs, thousands of Colorado families simply can’t pay their mortgages. In many cases buyers were victims of predatory lending practices that caught them in a trap of a high-interest subprime mortgage, while in others they simply saw the value of their houses decrease after the housing market crashed.
  • Bringing loan principles down to the true market value of homes would not only allow individuals to escape high-interest mortgages but would also infuse the national economy with over $71 billion every year; save families an average $543 per month on their mortgage payments; and help investors come out ahead to fix the foreclosure crisis once and for all.  It would also be the right thing to do for a company that took the people’s TARP dollars while using deceptive practices to lure buyers into high-interest sub-prime loans.
  • Wells Fargo recently settled its charge of dishonest lending practices for $85 million. Between 2004 and 2008 Wells Fargo conducted predatory lending practices that targeted minority communities and served to add to a worldwide economic crash. Though Wells Fargo received the largest fine ever levied by the Federal Reserve on a bank in a consumer lending case, the bank did not admit guilt. However, after the case was settled, Stumph said the practice was only done by a relatively small group of employees. While the fine for predatory lending was a drop in the bucket for a bank that made over 45 billion last year, the practice cost thousands of people their homes and helped to feed the mortgage crisis.
  • At the end of 2009, Wells Fargo modified loans for only 22% of those eligible for modifications under the government program HAMP.
  • Though other banks have changed the process by which they sign off on foreclosures, Wells Fargo has been resolute that it employs the proper procedures to ensure mortgages are handled properly. This is in spite of being forced to re-file 55,0000 loans and the testimony Xee Moua, Wells Fargo vice president, who testified that she signed as many as 500 documents in two hours without having any idea of what she signed.

The process, known as “robo-signing” has been the cause of numerous unjustified foreclosures across the country. Though Wells Fargo has admitted to making errors in its mortgage foreclosures, and promised to fix those mistakes, it has not put foreclosure on hold. The delegation wants Wells Fargo to stop those foreclosures.

Coloradoans don’t want to be on the hook for the 140,000 homes expected to go into foreclosure by the end of next year. As a result, the delegation will be asking Wells Fargo to help save tax payers at least a portion of the 2.7 billion dollars Colorado tax payers are expected to pay to clean up the bank foreclosures.     

Increase small business loan lending.

Small businesses in Colorado give families jobs. According to the National Small Business Association 65 percent of net news jobs have been created through small businesses over the last 15 years. With Coloradoan still at historically high unemployment rates, our communities need the big banks to open their vaults to start-ups and aged business alike.

While Wells Fargo has been a recent leader in providing small business loans secured through the federal government’s SBA (7) loan program amongst the big banks, by providing $1.2 billion in Small Business Administration loans, the Coalition is demanding that it and other banks continue to expand their loan programs.

A CNNMoney report showed that small business lending rose between 2006 and 2008 to $711.5 billion dollars but dropped off sharply after the recession began. Lending has continued to drop to nearly 611 billion in 2011.

While banks have loosened lending for large companies, many small businesses continue to find that draconian stipulations and a continued hesitance by banks to trust small business success are continuing to make it difficult for small business to start, expand and hire new employees.    

Divest from Private Prisons: Change your mutual fund strategies so as to divest from GEO Corp and Corrections Corporation of America. 

In a July story in Westword, Cristie Drumm, spokeswoman for Wells Fargo, said that bank did not personally own stock but had made mutual fund purchases on behalf of their clients.

According to Yahoo Finance, Wells Fargo & Company is the 3rd largest institutional shareholder of the for-profit prison company Geo, Inc., which operates the Immigration and Customs Enforcement center in Aurora.  The bank controls 5.54 percent of Geo through Wells Fargo & Company and 3.87 percent through Wells Fargo Advantage Small Cap Value Fund.  Similarly they control significant shares in Corrections Corporation of America, another for profit prison that, according to a 2010 NPR report, has helped fashion immigration laws in Arizona.

Members of the delegation are asking that they change their mutual fund strategy.

What: Delegation will Deliver demands to a Wells Fargo branch and have it faxed to CEO Jeff Stumpf.

When: 11:30 a.m. Denver time

Where: Meet at the Colorado Progressive Coalition, 1029 Santa Fe Drive, Denver

Colorado Progressive Coalition is a multicultural and cross-issue coalition of individuals and organizations empowering people through grassroots community organizing to have a voice in the policy decisions that affect our lives.  Our vision is a state where everyone, not just the privileged and powerful, has the opportunity participate in our political, economic, and social democracy.