City may pull accounts from Wells Fargo for foreclosure abuses

Foreclosure abuses

In light of increasing reports of foreclosure abuses, the city government of Berkeley, California is considering pulling their $350 million out of all of their Wells Fargo accounts in exchange for a financial institution they deem less abusive and more consumer-friendly, according to the Oakland Tribune.

This week, the Berkeley City Council voted unanimously to begin the discovery process of where to move their accounts as they search for “responsible financial institutions.” City Council members, Darryl Moore and Jesse Arreguin released a statement stating, “Wells Fargo Bank … was a key part of the subprime lending crisis which led to our overall economic collapse.”

Berkeley Mayor Tom Brewer said he has closed his own personal account at Wells Fargo and transferred his business to a “community bank,” while noting that Wells Fargo has not only donated millions to local charities but loaned significantly to local small businesses. Nonetheless, the city will file a report in May regarding their decision about potentially ending their eight year relationship with Wells Fargo as their contract ends at the end of 2012.

Rauly Butler, Senior VP of retail banking for local bank, Mechanics Bank, attended the meeting and stated, “There has been some talk about, can community banks handle this size of business. The answer is, yes they can and I want to thank you for taking up the issue.” Butler said his bank, which has about $216 million in deposits from Berkeley customers, already handles money for Albany, El Cerrito, Richmond and San Pablo.

What is striking to our team is that a city, particularly as progressive as Berkeley was not banking with a local bank and supporting a local financial institution to begin with.

Wells Fargo, like other major banks, has an extensive track record of mishandling mortgage issues, such as the following:

1. Single homeowner forecloses on Wells Fargo, becomes folk hero
2. Family man goes on hunger strike over Wells Fargo’s mishandling of mortgage
3. Couple never misses a mortgage payment, refuses to stop foreclosure
4. Wells Fargo tells homeowner to skip payments, then offers a $2 loan modification
5. Wells Fargo (and others) give loan modifications if homeowners waive legal rights
6. Wells Fargo fined $85 million for abusive mortgage practices
7. Big banks found to still be committing robo-signing foreclosure fraud, September 2011
8. Wells Fargo allegedly steered minorities into unnecessarily risky mortgages
9. Wells Fargo misleads, defrauds mortgage borrowers