Between the fake-account scandal, various lawsuits and trouble with settlements, the banking giant could probably use a win – and a federal appeals court just handed it one
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Between its fake-account scandal, trouble with settlements, and the lawsuits accusing it of discriminatory lending, Wells Fargo could probably use a win – and a federal appeals court just handed it one.
Back in 2013, Wells Fargo was sued by the city of Los Angeles, which alleged that the bank – along with Citigroup and Bank of America – was participating in discriminatory lending, and was to blame for a spike in foreclosures in the city.
However, a district judge threw the suit against Wells Fargo out in 2015, ruling that Los Angeles hadn’t proved that the bank’s policies caused minority lenders to get stuck with higher-cost loans, according to a HousingWire report.
The Los Angeles city attorney appealed the ruling, but the Ninth Circuit Court of Appeals has now ruled in Wells Fargo’s favor. Three of the appeals court’s judges ruled unanimously that the lower court’s decision was correct, HousingWire reported. In a four-page ruling, they said that Los Angeles “did not show a discriminatory loan” during the time period covered by the lawsuit.
The city claimed that Wells Fargo’s compensation plan incentivized loan officers to push minority borrowers into higher-cost loans. It also claimed that the bank’s marketing targeted low-income borrowers, and that the bank didn’t adequately monitor its loans to ensure there weren’t disparities, HousingWire reported.
However, the appeals court ruled that Los Angeles “failed to demonstrate how the first two policies were causally connected in a ‘robust’ way to the racial disparity, as they would affect borrowers equally regardless of race, and the third is not a policy at all.”
“We are pleased with the appellate court’s very quick decision to uphold the district court’s thoughtful ruling and to confirm the dismissal of the Los Angeles city attorney’s mortgage case against Wells Fargo,” the bank said in a statement. “We will continue our focus on helping to expand home ownership opportunities in the city and across the country.”
The lending giant might not want to get too comfortable, though – it’s still facing a discrimination lawsuit filed by the city of Philadelphia.
Related stories:
Philadelphia accuses mortgage lending giant of discrimination
Wells Fargo’s $142 million settlement may be too small – judge
Back in 2013, Wells Fargo was sued by the city of Los Angeles, which alleged that the bank – along with Citigroup and Bank of America – was participating in discriminatory lending, and was to blame for a spike in foreclosures in the city.
However, a district judge threw the suit against Wells Fargo out in 2015, ruling that Los Angeles hadn’t proved that the bank’s policies caused minority lenders to get stuck with higher-cost loans, according to a HousingWire report.
The Los Angeles city attorney appealed the ruling, but the Ninth Circuit Court of Appeals has now ruled in Wells Fargo’s favor. Three of the appeals court’s judges ruled unanimously that the lower court’s decision was correct, HousingWire reported. In a four-page ruling, they said that Los Angeles “did not show a discriminatory loan” during the time period covered by the lawsuit.
The city claimed that Wells Fargo’s compensation plan incentivized loan officers to push minority borrowers into higher-cost loans. It also claimed that the bank’s marketing targeted low-income borrowers, and that the bank didn’t adequately monitor its loans to ensure there weren’t disparities, HousingWire reported.
However, the appeals court ruled that Los Angeles “failed to demonstrate how the first two policies were causally connected in a ‘robust’ way to the racial disparity, as they would affect borrowers equally regardless of race, and the third is not a policy at all.”
“We are pleased with the appellate court’s very quick decision to uphold the district court’s thoughtful ruling and to confirm the dismissal of the Los Angeles city attorney’s mortgage case against Wells Fargo,” the bank said in a statement. “We will continue our focus on helping to expand home ownership opportunities in the city and across the country.”
The lending giant might not want to get too comfortable, though – it’s still facing a discrimination lawsuit filed by the city of Philadelphia.
Related stories:
Philadelphia accuses mortgage lending giant of discrimination
Wells Fargo’s $142 million settlement may be too small – judge
