Wells Fargo, Bank of America funds predatory lenders with outrageous interest rates
An investigation by a local ABC affiliate found that Wells Fargo and other major U.S. banks fund many predatory lenders who target minority borrowers with high interest charges.
WFAA, a subsidiary of Dallas ABC, explored how the big banks will not lend to, but will continue to make money on minority residents of South Dallas, including buying and enjoying low-income apartments that perpetuate the crime and scourge.
South Dallas has 88 payday lender storefronts, according to the survey. Payday lenders offer quick loans marketed as a way to pay for rent or needed car repair. However, deep in the fine print, there are interest rates of up to 400% that are almost impossible to repay.
Last week tonight did a segment in 2014 detailing how these loans push minority clients into debt quickly with high interest charges. Texas was one of the states featured in the segment.
The states Office of the Consumer Credit Commissioner is responsible for regulating payday lenders, auto securities, remittances and pawn shops. However, state law allows payday lenders and others load interest rates and fees well beyond what a traditional bank would charge.
The investigation excavated public archives deposited with the we Security and Trade Commission and found 20 banks, including Wells Fargo, Bank of America, and Texas-based banks such as Capital Bank of Texas, TBK Bank, and Independent Bank have recently funded or are currently funding predatory lenders.
Fort Worth-based FirstCash describes itself as the leading international operator of pawn shops, operates nearly 3,000 stores and charges up to 240% interest on a loan. The investigation revealed that Wells Fargo, Texas Capital Bank and Bank of Texas are all creditors of the company.
World Finance, another high cost lender that offers installment loans, where a person borrows a fixed amount of money all at once. The borrower can then repay the loan in a fixed number of installments, called installments.
These loans carry between 80% and 113% interest and a 2015 filing with the SEC shows Wells Fargo committed $ 200 million to World Finance. Bank of America, was also a longtime lender for World Finance, but ended its relationship with the company last year and started its own loan service called Balance Assist, which allows customers to borrow up to at $ 500, for a fee of $ 5, with much better terms. and interest rates.
Wells Fargo, which paid nearly $ 8 million to settle a class action lawsuit in a hiring bias lawsuit last year, responded to the inquiry in a statement.
“Wells Fargo provides credit and services to businesses in a variety of financial services industries,” spokesperson Camille Brewer wrote. “We have relationships with companies that have demonstrated a strong and ongoing commitment and ability to comply with the laws and regulations applicable to their business operations.
Black American and Latino households make up less than half of all households in the state (45%), however, they make up 74% of payday loan customers according to WFAA.