|Western Union||Community Reinvestment Policy||(see below)|
|Wells Fargo||Racial Disparities in Mortgage Lending||(see below)|
Western Union Shareholder Resolution 2008
Western Union Community Reinvestment Policy
The federal law known as the Community Reinvestment Act (CRA) obligates federally insured banks and depository institutions to help meet the needs of communities in which they operate. No such law exists for money transfer agencies like Western Union.
In March 2007, Federal Reserve Chairman Ben Bernanke stated, "the CRA reaffirmed the long-standing principle that financial institutions must serve the convenience and needs...of the communities in which they are chartered." (1)
Western Union serves many of the financial needs of immigrant populations, as a bank might, with a major presence in poor and racially diverse neighborhoods.(2)
Western Union's customers are mostly urban and poor. The typical user of its 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.(3) 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 cities such as San Salvador, Mexico City, and Manila.(4)
Remittances contribute about 80% to a recipient household's total income.
Almost half of Philippine households who receive remittances depend solely on this source of income. The highest monthly allocations for expenses from remittances are for food, rent, and education.(5)
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.
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 our Company's relatively low degree of community reinvestment, increase the risk our Company faces in the competitive consumer market.
BE IT RESOLVED THAT: the Company develop and implement a written policy for community reinvestment.
SUPORTING STATEMENT: In our view, community investment goes beyond charitable donations and corporate volunteering. We believe a policy and strategy to build social capital in communities is essential. Such a policy is best created by engaging community organizers to identify community needs to develop long-term programs that reflect those needs.
(1) The Community Reinvestment Act: Its Evolution and New Challenges, Federal Reserve Chairman Ben S. Bernanke, 3/30/07.
(2) Analysis of Alternative Financial Service Providers, Urban Institute, 2004.
(3) Distributing Prepaid Cards through Worker Centers: A Gateway to Asset Building for Low-Income Households, The Center for Financial Services Innovation, October 2006.
(4) Transnational Institute for Grassroots Research and Action Research, April, 2007.
(5) Enhancing the Efficiency of Overseas Workers Remittance, Asian Development Bank, July 2004.
Wells Fargo Shareholder Resolution 2008
Wells Fargo Asked to 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, 53.7% of conventional purchase loans to African-American borrowers in 2006 were "high-cost" versus just 17.7% 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 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 30.3% of the time; Latino borrowers 20.7% of the time and white borrowers 17.2% of the time.
Racial disparities in Wells Fargo's 2006 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 45.8% of the loans to African-Americans, 22.6% of the loans to Latinos, and 12.4% of the loans to whites. African-Americans were 3.69 times more likely than whites to receive a high cost loan and Latinos were 1.82 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:
- 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?
- 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?
- 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?