Wells Fargo Uses Tavis Smiley For Subprime Loan Trap?

Did Tavis Smiley help Wells Fargo herd black people into subprime loans? Yes, according to information contained in a lawsuit filed recently by Illinois Attorney General Lisa Madigan. The suit alleges that Smiley was the hook used to draw in potential customers for subprime mortgages.

You might be familiar with the “Wealth Building” seminars that Wells Fargo conducted beginning in the year 2000. Smiley was the headline speaker at these events, held in Baltimore; Chicago; Richmond, Va.; and San Francisco. The seminars were advertised aggressively in black media and aimed directly at black communities. They were a huge success. Often, standing room only audiences would hear Smiley speak about how he mostly disliked banks while strongly urging attendees to invest in real estate as a sound strategy to build wealth.

Turns out that keynote may be responsible for many unsophisticated, would-be home buyers being particularly vulnerable to the subprime loan slop Wells Fargo allegedly intended to push toward them:

But what appeared on the surface as a way to help black borrowers build wealth was actually just the opposite, according to a little-noticed explanation of the “Wealth Building” seminar strategy, contained in a lawsuit recently filed by Illinois Attorney General Lisa Madigan.

Wells’ plan for the seminars all along was to target black borrowers for higher-cost subprime mortgages, not for wealth-building, the suit charged. And the seminars were a part of the bank’s overall illegal and discriminatory practice of steering black and Hispanic borrowers into riskier and more expensive loans, the suit said.

According to a former Wells Fargo Home Mortgage employee, one of these “Wealth Building” seminars held in Maryland was planned for an audience that would be virtually all African American, the suit said. The plan for the seminar was for Wells Fargo Home Mortgage employees to talk about sub-prime mortgages, although they were directed by Wells Fargo Home Mortgage to use the term ‘alternative lending’ when marketing these products.” The former employee, who is white, was scheduled to speak at the seminar, but was told by a manager that she was “too white,” and that only black employees could make presentations, the suit said.

Wells Fargo, one of the nation’s largest mortgage lenders and a recipient of $25 billion in government bailout money, has denied all the charges in the Illinois suit, as well as other allegations of unfair lending. The bank did not respond to requests for comment on the seminars. Smiley, an author and advocate who hosts the late-night talk show, ‘Tavis Smiley,’ and who organizes the State of the Black Union symposiums each year, also declined comment. Source: Suit Alleges Trusted Black Figures Drew Minorities to High Rate Loans, Washington Independent

These are extremely serious allegations that will play out in the legal arena. But having worked with Smiley during the last “State of the Black Union,” I do not believe he intentionally set out to hurt black people or poor people in general. That would be like me believing that Wall Street intentionally set out to destroy its own money-making schemes.

There are at least two glaring takeaways from this. For Smiley, I’m sure he’s learned the hard way to be much more careful about how people use him and his established goodwill to sell stuff. I am skeptical of all corporations. But the other takeaway is the observation that this white company used a black spokesman to instantly gain trust and credibility where it had done little work on the ground in the black community to EARN it themselves.

All of us need to be particularly cautious when any company pushes a black person to sell you something they want you to “feel” good about and not understand.

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Tags: Lisa Madigan, Tavis Smiley, Wealth Building Seminars, Wells Fargo