Mayor Eric Adams and Comptroller Brad Lander have publicly promised that New York City will block Wells Fargo from any new contracts for banking services, following claims the financial giant racially discriminates against Black homeowners.
The pledge comes on the heels of a letter Adams and Lander received on Monday from Public Bank NYC, an advocacy coalition campaigning for a government-run municipal bank, which slammed Wells Fargo for disproportionately denying Black homeowners’ mortgage refinancing applications last year.
Wells Fargo is one of 30 financial institutions approved to compete for contracts to host municipal bank accounts, which city agencies use to hold payroll, fees, and other pots of money.
Adams and Lander are not officially revoking that designation, as advocates originally demanded, but the duo’s promise will have a similar effect: preempting the bank from winning any contracts to hold city deposits.
In a letter sent to the bank’s CEO on Tuesday and made public Friday, Adams and Lander justified the move by pointing to the bank’s refinancing disparities as well as older allegations of discrimination.
“These disparate mortgage practices, layered upon a checkered history of steering homeowners of color into subprime mortgages, rejecting mortgages in redlined neighborhoods, and numerous outstanding consent decrees pertaining to mortgage practices, require a swift response by both your bank and stakeholders,” the two officials said. “In light of this persisting track record of discrimination, New York City will not be opening any new depository accounts with Wells Fargo Bank, N.A. as we continue to investigate these troubling findings.”
Wells Fargo does not currently hold any depository funds for city agencies, according to a balance ledger form obtained by THE CITY through a public records request. But Adams’ move does mark a break with his predecessor.
Last May, the administration of then-Mayor Bill de Blasio gave Wells Fargo the green light to compete for city contracts — reversing course from a decision four years earlier, when the city began winding down municipal deposits with the bank because its federal Community Reinvestment Act rating had been downgraded following allegations of widescale fraud and racially discriminatory loan practices.
Advocates said they were happy to see the announcement, but still want the city to go further, citing city banking commission rules intended to discourage discrimination.
“We are pleased to see Mayor Eric Adams and Comptroller Brad Lander committing to refrain from opening city accounts with Wells Fargo, following alarming reports of the bank’s discriminatory mortgage lending practices,” said Andy Morrison, an organizer with Public Bank NYC. “They can and must go further, however, by formally revoking Wells Fargo’s designation to hold city deposits, pursuant to the City’s rules and regulations.”
In a statement, Wells Fargo said it was “deeply disappointed” in Adams and Lander, and asserted that the discrimination allegations against it “do not stand up to scrutiny.”
“We are confident that we follow relevant [Government-Sponsored Enterprise] guidelines in our decision making and that our underwriting practices are consistently applied regardless of a customer’s race or ethnicity,” said Robert Sumner, a communications liaison for the bank. “We do not believe that these claims are based on factual analysis. We welcome the opportunity to correct the record with city officials.”
As THE CITY previously reported, last year Wells Fargo denied 52.6% of completed refinancing applications from Black New York City residents with conventional primary mortgages for single-family homes. Those rejections precluded around 300 homeowners from being able to access equity from their properties or secure lower interest rates — at a time when many homeowners across the country were benefiting from historically low mortgage rates.
The bank’s 2020 denial rate was more than twice that of the rest of the industry in New York City, and nearly double that for white applicants to Wells Fargo.
That figure was not an aberration for the bank. Over 2018 and 2019, the bank rejected 52% of similarly situated Black homeowners across the five boroughs, an analysis of federal mortgage data by THE CITY found.
Last month, a Bloomberg News investigation into Wells Fargo found similar denial rates nationwide. The story was cited in a national class action lawsuit and sparked congressional calls for a federal investigation.
