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NAACP drops lawsuit against Wells Fargo

By Aaron Smith, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) -- The NAACP has dropped its racial discrimination lawsuit against Wells Fargo, the organization and the company said on Thursday.

"Wells Fargo and the NAACP have agreed to work constructively on ways to improve fair credit access, sustainable home ownership and financial literacy for communities of color and other historically disadvantaged communities," Wells Fargo and the NAACP said in a joint press release.

The NAACP said that Wells Fargo (WFC, Fortune 500) is just one of 14 financial institutions that it has sued since 2007 over allegations that these companies violated the Fair Housing and Equal Credit Opportunity acts. The other firms include JPMorgan Chase (JPM, Fortune 500), Citibank (C, Fortune 500) and HSBC.

JPMorgan Chase spokeswoman Christine Holevas and HSBC spokeswoman Kate Durham both declined to comment.

Citibank spokesman Mark Rodgers said, in an e-mail, that his company considers each applicant "by the same objective criteria, which are blind to race, ethnicity, gender and any other prohibited means. These objective criteria include credit scores, loan to value ratios, debt to income and other key factors."

He said this allows Citibank "to set rates that are consistent with the risk profile of each borrower."

The lawsuits, filed in U.S. District Court in central California, accused the financial firms of giving subprime rates -- meaning higher interest rates -- to African-Americans who qualified for better rates.

When the NAACP first announced the lawsuits against HSBC and Wells Fargo in March 2009, they both denied the allegations. "We stand by our lending practices," Durham of HSBC told CNN at the time.

On Thursday, the NAACP said that it was seeking "to change mortgage lending industry behaviors," rather than financial compensation for the alleged victims of racial discrimination.

"We commend Wells Fargo for taking a leadership role by being the first to embrace our principles, and hope this effort becomes a model for collaborating with other financial institutions," NAACP president Benjamin Todd Jealous said in a press release.

Jon Campbell, head of Wells Fargo's social responsibility group, said this was "the next constructive step forward in realizing our vision of helping all of our customers to further business ownership and promote financial empowerment." To top of page

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