According to the Federal Reserve, African-Americans were three times more likely to receive higher priced loan products than non-Hispanic whites in 2005 and 2006. More than half of the high-priced loans issued to African-Americans during 2006 are now at risk of foreclosure, being over 60 days past due. Black home ownership, which had seen dramatic gains in the early part of the decade, hit a sharp decline as a result of the foreclosure crisis. We have started to move backward.
One of the alleged culprits in this multi-billion dollar scandal is a company called Wells Fargo. Wells Fargo has been sued by state and local governments around the nation for allegedly engaging in massive amounts of predatory lending, which has devastated black and brown communities everywhere. Terrible bank loans, combined with widespread unemployment in the black community, have served to destroy hundreds of billions of dollars in wealth in a matter of months.
You can imagine my shock when I learned that Wells Fargo, the company accused of squashing the financial security of millions of African-Americans, is now listed as one of the title sponsors of the NAACP’s annual convention this July.
Not only is such a partnership unacceptable on the surface, there are quite a few reasons for many of us to be skeptical of an organization (the NAACP) that drops a lawsuit against a company and soon after has the company appearing as a major donor. Not a good look for the NAACP, a group that is already accused of having sold itself to corporate America, arguably becoming socially impotent in the process.
When blogger Faye Anderson brought the Wells Fargo sponsorship to my attention, I didn’t automatically buy into the hype. I didn’t and do not want to believe that the NAACP would sell itself to a company accused of being one of the greatest vultures in the African-American community since the advent of slavery. I don’t know Ben Jealous personally (we’ve only crossed paths), and it’s not that I am important enough for the NAACP to acknowledge (I’m just a lowly professor with a big mouth), but I remain hopeful that they can provide a thorough explanation for what might turn out to be quite an embarrassing debacle. Black people deserve a chance to know what in the heck is going on.
Partnering with Wells Fargo is not a problem in itself, since it may be the case that the company is working with the NAACP to improve its way of doing business. That’s a good idea, but the question becomes whether the suspicious bank needs to make right with the NAACP, or instead find redemption with the millions of African-Americans who lost their homes. Another star-studded gala or extravagant NAACP Awards show does nothing for those who’ve become homeless or bankrupt because of the predatory lending practices allegedly committed by Wells Fargo. That’s like a child molester hurting 200 kids in the neighborhood and then being granted sainthood by the local priest. The NAACP’s fiduciary responsibility to protect the interests of the black community must play a role in the nature and transparency of the Wells Fargo settlement. They can’t get around this fact.
I am not standing with the Tavis Smiley campers who want to attack NAACP President Ben Jealous — or anyone who participated in the meeting with President Obama last month. There are some who stand to cast instant judgment on the nature of this partnership, presuming the very worst at first glance. I believe this is wrong.
But the NAACP must do the following in order to make things right with this deal they’ve made with Wells Fargo:
1) The NAACP needs to give us all a thorough explanation: I’m not talking about a vague statement regarding how you’re going to work with Wells Fargo to ensure that they engage in fair lending practices. Yea, yea, yea. That sounds as watered down as the words of a wealthy third-world dictator who allows Exxon Mobile to extract all of the nation’s resources. There must be specifics on exactly what Wells Fargo is going to do for the black community, since this partnership with the NAACP gives the company the right to brag to its shareholders, the court of law and the general public about how they are such a wonderful friend to the African-American community. Wells Fargo is certainly no friend of mine, nor are they a friend to my grandfather, who lost his home after 40 years due to predatory lending. Thus far, Wells Fargo has only stated in the New York Times that it does not have any immediate plans to change its lending practices. Does this imply that the company feels that it’s done enough already?
2) Full disclosure of the NAACP and Wells Fargo’s financial relationship is an absolute must, and Wells Fargo needs to cough up some of their ill-gotten gains from the black community. By stoically refusing to share financial details of their deal with Wells Fargo, the NAACP is giving itself a terrible look. The amount of the NAACP sponsorship by Wells Fargo should be disclosed, as well as all logic relating to how the deal came to be in the first place. It may also make sense to create some institutional infrastructure to help people restructure their Wells Fargo loans, or receive loans that they need in order to fund small businesses. Wells Fargo needs to put its money where the NAACP’s mouth is; a small donation to the organization simply will not do.
As a Finance Professor, the reason I wrote the book, Black American Money was to explain that it is almost impossible to fight against oppression while taking money from entities that are owned and run by those who are doing the most harm to your constituents. If a woman is being beaten by her husband but continues to remain financially dependent on the man who is abusing her, she undermines her ability to either leave the marriage or demand the respect she deserves. By taking money from the highest bidder without seriously considering what the donor is demanding in return, the NAACP opens itself up to accusations of corruption and ineffectiveness in our community. The fox should not be given access to the chicken coop, no matter how many gifts he bears. Some people should never be allowed to buy your friendship.