Wells Fargo, HSBC Defend Lending Practices Following NAACP Suits

By MICHAEL R. CRITTENDEN

WASHINGTON -- Wells Fargo Corp. and HSBC Holdings PLC defended their lending practices on Friday after the NAACP's announcement it was filing lawsuits against the two banks alleging "systematic, institutionalized racism" in their lending to certain borrowers.

"We stand by our fair lending and consumer protection practices, and we are confident that we are treating our customers fairly and with integrity," an HSBC spokeswoman said in an emailed response.

Wells Fargo said in a statement also sent via email that the allegations "are totally unfounded and reckless," and described the thought of a discrimination claim "reprehensible."

"We have never tolerated, and will never tolerate, discrimination in any way, shape or form in any of our business practices, products, or services," Wells Fargo said, vowing to "vigorously defend" the allegations.

The comments were in response to the National Association for the Advancement of Colored People saying it would file separate lawsuits against the banks in U.S. District Court in California on Friday morning. The group claims that African-American homeowners were frequently steered into mortgages with higher interest rates than those offered to white borrowers with similar credit histories.

Austin Tighe, co-lead counsel for the NAACP, told Dow Jones Newswires late Thursday that predatory lending practices "are legally actionable and more importantly, morally reprehensible."

Wells Fargo said its loan terms and pricing are based on market factors, as well as "individual customer and loan circumstances." The bank also noted it had been working with the NAACP for the past two years to develop a partnership "that would benefit the NAACP, its constituents and our communities."

"So we are dismayed that the NAACP has chosen to abandon that constructive dialogue in order to pursue this litigation," Wells Fargo said.

The lawsuits against the two banks are tied to a broader 2007 lawsuit NAACP filed against other large banks and lenders alleging discriminatory lending practices. Mr. Tighe said the allegations against HSBC and Wells Fargo were being filed as a result of subsequent investigations and calls made to the NAACP.

He noted that a federal court denied a joint motion filed by the lenders in the original lawsuit to dismiss the 2007 case earlier this year, and said lawyers hoped to soon obtain internal company documents that contributed to the alleged discrimination.

"We're going to be requesting policy and practice documents that have probably never been seen publicly before," Mr. Tighe said.

Write to Michael R. Crittenden at michael.crittenden@dowjones.com