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Sloan chaired Saturday’s fundraiser, which attracted 380 supporters, who, according to the Sun, munched on “mini Kobe burgers and watermelon and cucumber sangria drops” served on silver trays, followed by a dinner of “grilled filet of beef and jumbo shrimp scampi,” with a “warm chocolate soufflé cake” for dessert. The dining was “accompanied by music from Wayne Foster Entertainment.”
The battle between Sloan and Wilson is emblematic not only of the nation’s wide and growing gap in economic wealth, but also of the huge disparity in political influence.
Sloan and his bank can exercise their free speech rights with huge campaign contributions and lobbying expenses, now made easier by the Supreme Court’s Citizens United decision. Sloan has donated more than $25,000 to political candidates in the past two years. About 80% of his contributions have gone to Republicans, including $8,750 to Mitt Romney, $5,000 to Sen. Scott Brown of Massachusetts (who is being challenged by Elizabeth Warren, the banking industry’s biggest foe), and $6,000 to the Republican National Committee.
Sloan’s donations parallel Wells Fargo’s broader efforts to wield political clout. During the same period, according to the Center for Responsive Politics, Wells Fargo has contributed more than $2.4 million to candidates for president and Congress, most of it directed to Republicans. In addition, Wells Fargo, the nation’s largest home mortgage lender and fourth largest bank, spent over $11.6 million on lobbying expenses, primarily to get Congress to weaken regulations protecting consumers from Wall Street trickery.
Wilson can’t afford to make campaign contributions to politicians. Instead, she and people like her depend on grassroots organizing and protest to get their voices heard.
“I’m doing this because people need to see what the banks are doing. It’s awful. It has to stop,” explained Wilson. “When I was down and out in the hospital, they took my house.”
In the eyes of San Marino’s elected officials and its city manager, Wells Fargo CFO Tim Sloan is a victim of “this type of crime” – people exercising their First Amendment rights to assemble and protest. To enforce this odious law, San Marino taxpayers paid for police to protect Sloan from 80 peaceful protestors and a woman in a wheelchair.
But who’s the real criminal here?
Among major banks involved in shady and abusive practices, Wells Fargo has been one of the worst offenders.
In 2006, before the subprime bubble started to burst, Wells originated or co-issued $74.2 billion worth of subprime loans, making it one of the top subprime lenders in the country. The Federal Reserve Board levied an $85 million civil fine on Wells Fargo for steering borrowers inappropriately into subprime loans and falsifying income information on loan applications. This is the largest civil consumer enforcement fine ever imposed by the Fed.
In July, in another legal imbroglio, Wells Fargo agreed to pay at least $175 million to redress blatant discrimination against African American and Hispanic borrowers. In cities across the country, brokers working with Wells Fargo steered minority borrowers into costlier subprime mortgages with higher fees when white borrowers with similar credit risk profiles received regular loans. Furthermore, while its mortgage lending to white borrowers increased, it dropped dramatically for African-American and Hispanic borrowers.
In past five years, Wells Fargo has been sued at least 55 times for charging abusive mortgage default fees, submitting false and misleading court documents, processing unlawful foreclosures, mortgage appraisal and origination fraud, charging military veterans with hidden and illegal fees, robo-signing of mortgage documents, and other illegal acts.
Wells Fargo is also deeply involved in the payday lending business that preys on cash-strapped families by providing short term loans with exorbitant fees and annual interest rates (typically around 400%) that trap people in a cycle of debt, particularly borrowers in poor and minority neighborhoods. Wells Fargo provides financing for nine payday companies that operate one third (32%) of the entire industry, whose stores are concentrated in African American and Latino neighborhoods
As of June 2010, Wells Fargo had $17.5 billion worth of foreclosed homes on its books, making it one of the nation’s three top banks in foreclosure activity. Despite getting a $37 billion taxpayer bail-out, Wells Fargo went kicking and screaming before it reluctantly agreed to participate in the federal government’s Home Affordable Modification Program. Even so, it has provided help to few of its borrowers who are eligible for loan modifications that will keep families in their homes.
In the past six years, housing prices nationwide have fallen by a third. Families have lost nearly $7 trillion of home equity. More than four million homeowners have lost their homes. Another 3.5 million homeowners are in the foreclosure process or are so behind in their mortgage payments that they soon will be confronted with losing their homes.
About 15 million homeowners are “under water” – they owe $700 billion more on their mortgages than their homes are worth. Many economists agree that the most effective solution would be for the federal government to require banks to renegotiate mortgages for “underwater” owners to reflect the new market values of their homes. The Obama administration resisted this idea until recently, but the bank industry lobby, including Wells Fargo, has fought to stop any legislation mandating “principal reduction.” Instead, they want any mortgage re-sets to be entirely voluntary.
Wilson is one of those many homeowners whom Wells Fargo refuses to help, which is why she wound up on Tim Sloan’s doorstep, trying desperately to pay her mortgage so should can stay in her home.
Sloan’s Huntington Library charity ball raised $300,000, almost twice the current value of Wilson’s house, which she may soon have to leave if Sloan and his bank don’t do the right thing.
California is ground zero in the battle between homeowners and Wall Street. ACCE, SEIU, and their allies (including groups like the National Council of La Raza, the Courage Campaign, and others) have won important victories on several fronts – keeping families in their homes by pressuring banks to rewrite mortgages, getting cities to require banks to pay for the costs of cleaning up vacant foreclosed properties, and getting the state legislature to enact of Homeowners Bill of Rights to protect consumers from banks pulling the foreclosure trigger too quickly.
Nationwide, community groups, unions, and faith based groups are laying the groundwork for a major assault on Wall Street greed. They intend to expand their protest actions by focusing on a handful of major banks that are responsible not only for the epidemic of foreclosures and declining home values, but also the implosion of family debt (due to outrageous student loans) and government austerity (due to declining property values and revenues).
And should Obama win a second term, groups like the Home Defenders League, a national network of activist groups, expect to push the president and Congress to adopt regulations to require banks to reset mortgage loans (called “principal reduction”) so that payments align with the reduced value of their homes. They estimate that homeowners’ monthly savings, if spent on consumer goods and services, would generate a million jobs a year.
“This is about more than helping homeowners stay in their homes,” explains ACCE’s Amy Schur. “This is about holding Wall Street accountable, fixing the economy and getting the government on the side of consumers, not bankers. To do that, we have to name names. People have to know who the enemy is. “
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