The class action lawsuit was filed by NAACP in the federal court of Los Angeles county alleging that Wells Fargo and HSBC engaged in institutional racism against African-American borrowers.
The main allegation against these banks are that they treated African-Americans in a manner that was “disparately adverse” on an institutional level. They forced black borrowers into risky, subprime home mortgages while white borrowers with the same qualifications were given loans with lower interest rates.
The lawsuit alleges that African-Americans were about one-third more likely to be steered toward subprime loans than white borrowers with the same qualifications.
Similar lawsuits have also been filed against Citigroup and JPMorgan Chase.
However, according to Wells Fargo and HSBC this is an absolutely wrong allegation, as subprime mortgages were offered by almost all banks in America to borrowers with weak credit.
Wells Fargo and HSBC provided more subprime mortgages to African-American borrowers, because there is a greater proportion of people with weak credit among African Americans. Nobody forced the African-Americans to accept this risky loans, they have signed every thing according to their freewill.
According to an NAACP attorney, blacks across the United States were forced into home loans with bad terms. Determining precise numbers of victims of predatory lending is difficult because banks keep much of their internal data private.