Connecting state and local government leaders
The lawsuit claims foreclosures cost the city tax revenue and caused blight.
Accusing the bank of predatory and discriminatory lending practices that targeted African Americans and Hispanics, the city of Oakland has sued Wells Fargo & Co. in federal court.
The lawsuit, which was filed on Monday, alleges that Wells Fargo steered minority customers toward mortgages that were riskier and costlier than loans they might have otherwise qualified for and that minorities were also denied refinancing opportunities extended to white borrowers.
These lending practices, the suit claims, led to foreclosures, which hurt the city economically and in other ways, costing Oakland millions of dollars in lost property tax revenue, and expenses tied to municipal services. The legal complaint points specifically to costs for services the city provided to remedy blight and unsafe conditions at foreclosed property.
“Wells Fargo’s discriminatory conduct devastated individuals and communities, increasing poverty and wiping out or drastically reducing wealth for minority communities while bankers prospered,” City Attorney Barbara J. Parker said in a statement on Tuesday.
Wells Fargo spokesman, Tom Goyda, disputed the city’s claims in an emailed statement on Wednesday, saying that they “do not reflect how we operate in the communities where we do business and it’s disappointing that [the city attorney] has chosen this course of action over a collaborative approach to helping borrowers and homeowners in Oakland.”
Similar lawsuits filed by Los Angeles and Cook County, Illinois against Wells Fargo were dismissed in July. In May, a federal judge tossed out a separate lawsuit that Los Angeles had filed against Bank of America Corp., finding no evidence the city had suffered damages.
But a federal appeals court did decide earlier this month that a lower court wrongly dismissed three lawsuits the city of Miami brought against Wells Fargo and other banks under the Fair Housing Act, which alleged discriminatory lending practices.
The Oakland lawsuit was filed in the U.S. District Court for the Northern District of California.
Bill Lucia is a Reporter for Government Executive’s Route Fifty.