Responsible Wealth 2007 Shareholder Campaign

Responsible Wealth 2007 Shareholder Campaign

The 2007 Shareholder Advocacy Campaign

Company Issue Documents
Western Union
Review on Remittance Fees, Rates, and Policy (see below)
Wells Fargo Racial Disparities in Mortgage Lending (see below)


Western Union Shareholder Resolution 2007

Western Union Review on Remittance Fees, Rates, and Policy

WHEREAS, we believe onerous charges in the multi-billion dollar money transfer industry place an undue economic burden on low-income immigrant families in the United States and in their communities of origin while creating an increased reputational risk for our Company.

According to the World Bank, the remittance market will generate more than $15 billion in annual revenues in 2006, with profit margins for companies like Western Union as high as 30%.

Migrant worker remittances, projected to reach $260 billion globally in 2006, constitute the second largest source of external funding for developing countries after Foreign Direct Investments (i.e., foreign aid) and are considered an economic life vest for the families of 200 million international migrants who send money home.

The typical user of remittance services is a low-wage immigrant worker who lives in urban America, makes $15,600 annually and sends home $293 a month, almost 30% of his or her net monthly income. These remitters spend up to $300 a year on costly transaction fees and disadvantageous exchange rates, which equals one week's salary for the remitter or at least sixty days' salary for their kin in San Salvador, Mexico City, and Manila.

The actual cost of sending money incurred by remittance agencies ranges from $2.95 up to $5.54 per transaction. Senders are charged up to $25 in fees and exchange rate commissions per transaction. This represents a major loss of income for poor families worldwide. Studies show that increasing remittances to families and communities in the global South by 10% has the potential to uplift 33 million people out of the global poverty threshold in developing countries. We believe these high fees and disadvantageous exchange rates are a barrier to more money being sent home.

Since starting its own foundation in 2000, Western Union has spent 5 cents ($.05) for every $100 of corporate profit - lagging far behind Wal-Mart ($1.20) and Ben & Jerry's ($7.50).

Western Union has faced numerous lawsuits based on predatory fees and unfair exchange rates. These suits have resulted in millions of shareholder dollars being spent on settlements. These practices, along with the Company's relatively low degree of community reinvestment, increase the risk our Company faces in the competitive consumer market.

RESOLVED, the shareholders request that the Western Union Board of Directors undertake a special review of the effect of the company's remittance practices on the communities served and report to shareholders on its findings including any policy changes instituted as a result of the review. The review shall also compare Western Union's fees, exchange rates, and pricing structures with other companies in the industry and evaluate Western Union's community reinvestment and corporate giving practices relative to its competitors. This report, prepared at a reasonable cost and omitting proprietary information, shall be available to all shareholders no later than September 1, 2007.


Wells Fargo Shareholder Resolution 2007

Report on Racial Disparities in Mortgage Lending

WHEREAS, there are wide disparities between the interest rates charged to African-American and Latino families compared to white families, according to Home Mortgage Disclosure Act data filed by lending institutions.

According to the Federal Reserve 54.7% of conventional first mortgages to African-American borrowers were "high-cost" versus just 17.2% of similar loans to white borrowers. The Federal Reserve defines "high cost" as an annual percentage rate (APR) of 3% above a comparable Treasury security on a first mortgage and 5% above a comparable Treasury security on a second mortgage. African-American families are 3.1 times more likely than white families to receive a high-cost mortgage, raising their cost of homeownership.

Even after adjusting for such factors as income levels of borrowers, location, loan amounts and type of lender, unexplained disparities remain in the Federal Reserve's analysis: African-American home borrowers receive high cost loans 27.2% of the time; Latino borrowers 20.8% of the time, and white borrowers 17.2% of the time.

Racial disparities in Wells Fargo's 2004 HMDA data are also pronounced. Of Wells Fargo's conventional first-lien mortgages (unadjusted for income, location, loan size, and lender type), high cost loans made up 29.5% of the loans to African-Americans, 12.6% of the loans to Latinos, and 7.6% of the loans to whites. African-Americans were 3.9 times more likely than whites to receive a high cost loan and Latinos were 1.7 times more likely than whites.

In April 2005, New York Attorney General Eliot Spitzer asked Wells Fargo and three other large banks for information on loan conditions and credit scores as he investigated whether the racial disparities in high cost loans violated state laws. According to Spitzer, Wells Fargo's African American customers in New York were three times more likely than whites to receive high cost loans, at JP Morgan Chase and Citigroup the disparity was 2-to-1 and at HSBC, 1.5-to-1. (Source: Washington Post 6/25/2005) Rather than comply with Spitizer's request, Wells Fargo joined others in successfully suing the Attorney General arguing that he had no jurisdiction over a federally chartered bank.

Shareholders request that the Board of Directors prepare a special report, providing explanations of racial and ethnic disparities in the cost of loans provided by the company. The report shall discuss the following questions:

    • 1) How does Wells Fargo explain the racial and ethnic disparities pertaining to high cost mortgages revealed in the company's Home Mortgage Disclosure Act data?
    • 2) Does Wells Fargo believe that the company's racial and ethnic disparities in high cost loans affect the home affordability or wealth-building benefits of homeownership for their minority customers?
      3) Does Wells Fargo believe some of these disparities are explained by the racial wealth divide prevalent in the United States? If so, what does Wells Fargo believe can be done to lessen this divide?

This report, prepared at reasonable cost and omitting proprietary information, shall be available to all shareholders, upon written request, no later than September 30, 2007.