Citigroup and Wells Fargo Targeted in L.A. Discrimination Lawsuit
Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) have once again found themselves in the crosshairs of a lawsuit. Reuters reports that Los Angeles has filed a lawsuit against the banks, alleging that they “engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis.”
That is, the banks issued discriminatory mortgages to minority communities. The end result was elevated foreclosures that reduced home values by an estimated $78 billion. This decline in property values means less city revenue from property taxes.
“When banks engage in such discriminatory conduct, the misconduct has profound financial consequences for the cities in which mortgaged properties exist, and banks should be responsible for those financial consequences. Banks should reimburse such cities for lost tax revenues due to discriminatory lending,” said the lawsuit, according to Reuters.