The DOJ (Department of Justice) has charged and settled with a number of banks over “redlining,” the practice of defining geographies that banks want to rule out when marketing and granting loans and mortgages. Nonetheless, media reaction tends to be muted, and I’ve seen no evidence presented documenting resulting customer defections. Seems to be “shrug of the shoulders” stuff from the FI side. “Yeah, we got caught. So what?” And from the customer side, “So what. Everyone does it.”
But the explosion in the number of mortgages offered minorities and the risks created by some very dicey mortgage instruments, coupled with moving minority customers qualifying for prime mortgages into much higher interest, sub-prime packages, have taken customer abuse to an entirely new level. We’re about to see customer tolerance tested.
Will the market punish WF, and other financial institutions found to have done the like?
That’s the question I asked myself after reading a June 6th New York Times article featuring admissions of minority customer abuse from two former WF mortgage sales executives. These two former high-flyers were part of a special unit they say WF set up to target minorities in a thoroughly abusive manner – right up to using descriptive language describing black customers I won’t repeat here. I was repulsed.
These admissions came in conjunction with a civil rights suit against WF filed by the City of Baltimore that goes to trial later this month. Almost without question, the media will pick up this story and give it national attention, and the Huffington Post republished the article today. http://www.nytimes.com/2009/06/07/us/07baltimore.html?scp=1&sq=baltimore... [1]
But will customers really care, especially customers outside the Baltimore area? Is our collective social consciousness high enough to punish companies the subject of seemingly credible accusations? (I'm asking about reaction here because rest assured, if WF believes it will lose the case, it will settle but with a gag order impeding further public communication).
Will be interesting to find out.
[side note: If you’ve been reading CT blogs long enough you may remember my post from several years ago, “Wells Fargo: Fifty Ways to Leave Your Customer.” After reading this NYT article, we’re now up to 100.]