July 13, 2012 10:00 AM
$175 Million?That's pocket change to Wells Fargo! What is that? That's not even a slap on the wrist, at least a slap on the wrist stings a bit.
How much of a sting does $175 million have for Wells Fargo?
According to the LA Times:
Wells Fargo profit up 17% as lending increases
Mortgage applications are at an all-time high at Wells Fargo, which earned $4.6 billion, or 82 cents per share, during the second quarter, up from $3.9 billion, or 70 cents, a year earlier.
Let's see, $4.6 billion for the quarter. If my math is correct, and there's always a chance that it could be, that comes out to about $50.4 million PER DAY in earnings. So $175 million, is what, about 3 1/2 days' profits? That's the penalty for defrauding 34,000 customers?
At a news conference, Deputy Attorney General James Cole said the bank’s discriminatory lending practices resulted in more than 34,000 African-American and Hispanic borrowers in 36 states and the District of Columbia paying higher rates for loans solely because of the color of their skin.
That comes out to about $5,000 per defrauded customer. What are the odds that these customers were screwed out of any less than 5 grand?
Cole said that with the settlement, the second largest of its kind in history, the government will ensure that borrowers hit hard by the housing crisis will have an opportunity to access homeownership.
The bank will pay $125 million in compensation for borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin rather than because of differences in credit-worthiness.
And now it's even less, $125 million.
Wells Fargo also will pay $50 million in direct down payment assistance to borrowers in areas of the country where the Justice Department identified large number of discrimination victims.
Wow, an entire $50 million to help folks who lost their homes afford down payments on new ones! $50 million to be spread around the various areas of the country where discrimination is wide spread. Well how many places could it be, really?
Those areas are Washington, D.C., Chicago, Philadelphia, Oakland and San Francisco, New York City, Cleveland, Riverside, Calif., and Baltimore.
So, yeah, that 50 mil is going to go a long way!
So, to recap, you can, assuming you are a large bank, screw 34,000 mortgage customers just because you're a racist ass, and IF you get caught, you might be docked about 3 days' pay. So what is your incentive not to screw people over?