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Minnesotans for a Fair Economy

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Payday Lending Report Release

4/17/12

Most customers cant afford to repay the whole loan in just a few weeks, and if the payday lender deposits their check, it will bounce, costing the customer even more in fees. So instead of incurring bounced-check fees, the customer agrees to renew the loan and just pays the interest, or takes out a new loan to pay off the old one, leading to a cycle of debt that can last for months or even years. Predatory Payday Lending in Minnesota: How U.S. Bank and Wells Fargo Hurt Consumers with Cash Fast Loans New York Times | Chasing Fees, Banks Court Low-Income Customers Huffington Post | Wells Fargo Extends Loans with Interest Rates Up to 274 Percent Star Tribune | Report Rips Banks on Payday Loans MPR | Advocates Say US Bank, Wells Fargo Loans Prey on Low-income Borrowers Minneapolis St. Paul Business Journal | MN Group Claims Big Banks Using Payday Loans Twin Cities Business | U.S. Bank, Wells Fargo Criticized for High-APR Loans Minnesota Daily | U.S. Bancorps Money Talks

Chasing Fees, Banks Court Low-Income Customers

Jennifer Silver-Greenberg and Ben Protess | New York Times | April 25, 2012

When David Wegner went looking for a checking account in January, he was peppered with offers for low- end financial products, including a prepaid debit card with numerous fees, a short-term emergency loan with steep charges, money wire services and check- cashing options. I may as well have gone to a payday lender, said Mr. Wegner, a 36-year-old nursing assistant in Minneapolis, who ended up choosing a local branch of U.S. Bank and avoided the payday lenders, pawnshops and check cashers lining his neighborhood. Along with a checking account, he selected a $1,000 short-term loan to help pay for his cystic fibrosis 2

medications. The loan cost him $100 in fees, and that will escalate if it goes unpaid. An increasing number of the nations large banks U.S. Bank, Regions Financial and Wells Fargo among them are aggressively courting low-income customers like Mr. Wegner with alternative products that can carry high fees. They are rapidly expanding these offerings partly because the products were largely untouched by recent financial regulations, and also to recoup the billions in lost income from recent limits on debit and credit card fees. Banks say that they are offering a valuable service for customers who might not otherwise have access to traditional banking and that they can offer these products at competitive prices. The Consumer Financial Protection Bureau, a new federal agency, said it was examining whether banks ran afoul of consumer protection laws in the marketing of these products. In the push for these customers, banks often have an advantage over payday loan companies and other storefront lenders because, even though banks are regulated, they typically are not subject to interest rate limits on payday loans and other alternative products. Some federal regulators and consumer advocates are concerned that banks may also be steering people at the lowest end of the economic ladder into relatively expensive products when lower-cost options exist at the banks or elsewhere. It is a disquieting development for poor customers, said Mark T. Williams, a former Federal Reserve Bank examiner. They are getting pushed into high-fee options. We look at alternative financial products offered by both banks and nonbanks through the same lens what is the risk posed to consumers? said Richard Cordray, director of the bureau. Practices that make it hard for consumers to anticipate and avoid costly fees would be cause for concern. Analysts in the banking industry say that lending to low-income customers, especially those with tarnished credit, is tricky and that banks sometimes have to charge higher rates to offset their risk. Still, in an April survey of prepaid cards, Consumers Union found that some banks prepaid cards come with lower fees than nonbank competitors. While banks have offered short-term loans and some check-cashing services in the past, they are introducing new products and expanding some existing ones. Last month, Wells Fargo introduced a reloadable prepaid card, while Regions Financial in Birmingham, Ala., unveiled its Now Banking suite of products that includes bill pay, check cashing, money transfers and a prepaid card. The Regions package is meant to attract the growing pay-as-you-go consumer, said John Owen, the banks senior executive vice president for consumer services. The packages are the latest twist on cross-selling, in which lenders compete to win a larger share of customer business with deals on checking, savings accounts and mortgages. Reaching the so-called unbanked or underbanked population people who use few, if any, bank services could be lucrative, industry consultants said. Kimberly Gartner, vice president for advisory services at 3

the Center for Financial Services Innovation, said that such borrowers were a $45 billion untapped market. The Federal Deposit Insurance Corporation estimates that about nine million households in the country do not have a traditional bank account, while 21 million, or 18 percent, of Americans are underbanked. Mr. Wegner, the U.S. Bank customer, said that once he mentioned that he needed a bank account, an employee started selling him prepaid cards, check cashing and short-term loan options. Mr. Wegner, who makes about $1,200 a month, said that he felt like a second-tier customer. It was clear that I was not getting the same pitches that wealthy clients would, he said. Since that initial visit, Mr. Wegner said he avoided the branch so he was not approached with offers. I go through the drive-through now, he said. Bank payday loans, which are offered as advances on direct-deposit paychecks, are a particularly vexing part of the new pitch from lenders, consumer advocates said. The short-term, high-fee loans, like the one Mr. Wegner received, are offered by a handful of banks, including Wells Fargo. In May, Regions introduced its Ready Advance loan after determining that some of its customers were heading to storefront payday lenders. The loans can get expensive. When the loan comes due, the bank automatically withdraws from the customers checking account the amount of the loan and the origination fee typically $10 for every $100 borrowed regardless of whether there is enough money in the account. That can lead to overdraft and other fees that translate into an annual interest rate of more than 300 percent, according to the Center for Responsible Lending. The Office of the Comptroller of the Currency, which oversees the nations largest banks, said in June that the loans raised operational and credit risks and supervisory concerns. Last summer, federal bank regulators ordered MetaBank, which is based in Iowa, to return $4.8 million to customers who took out high-interest loans. Lenders are also joining the prepaid card market. In 2009, consumers held about $29 billion in prepaid cards, according to the Mercator Advisory Group, a payments industry research group. By the end of 2013, the market is expected to reach $90 billion. A big lure for banks is that prepaid cards are not restricted by Dodd-Frank financial regulation law. That exemption means that banks are able to charge high fees when a consumer swipes a prepaid card.

The companies distributing the cards have drawn criticism for not clearly disclosing fees that can include a charge to activate the card, load money on it and even to call customer service. Customers with a convenient cash prepaid card from U.S. Bank, for example, pay a $3 fee to enroll, a $3 monthly maintenance fee, $3 to visit a bank teller and $15 dollars to replace a lost card. Capital One charges prepaid card users $1.95 for using an A.T.M. more than once a month, while Wells Fargo charges $1 to speak to a customer service agent more than twice a month. Some smaller banks even offer prepaid cards with credit lines, which carry steep interest charges. This is a two-tiered, separate and unequal system and it is worsening, said Sarah Ludwig, a lawyer who started the Neighborhood Economic Development Advocacy Project. Some lenders are even styling their offices to look like check-cashing stores. In June, Redstone Federal Credit Union, the largest credit union in Alabama, will open two stores that are designed to look exactly like check cashers. One of the stores, in Decatur, Ala., is part of a run-down strip mall and includes a sign that says Right Choice, Money Services. An adjacent store, not affiliated with Redstone, advertises loans for people who need money fast. It looks like a check casher, but once you get inside you get the best of both worlds, Peter Alvarez, Redstones emerging markets manager. The stores will offer traditional checking and savings accounts alongside prepaid cards, money transfer and bill paying. We wanted to attract people who wouldnt naturally come to a bank.

Wells Fargo Extends Loans with Interest Rates Up to 274 Percent

Bonnie Kavoussi | Huffington Post | April 17, 2012
Big banks are participating in a practice commonly associated with the use of big signs to lure vulnerable Americans. Wells Fargo, the country's biggest bank by market value, and U.S. Bank, the ninth largest bank by assets, are helping bankroll the payday lending industry, according to a report released earlier this week by Minnesotans for a Fair Economy, an advocacy organization. According to the report, Wells Fargo and U.S. Bank have both financed top payday lenders and extend payday loans to their own customers at sky-high interest rates: 365 percent per year for U.S. Bank and 274 percent for Wells Fargo on $500 loans.

The findings come as big banks face growing scruitiny for their payday lending activities. Richard Cordray, director of the Consumer Financial Protection Bureau, said in January that the bureau plans to look closely at big banks that make payday loans. The nation's top consumer cop is likely zeroing in on the practice because it's often the most financially vulnerable consumers that payday lenders are targeting. About one in four bank payday borrowers are Social Security recipients, and, on average, bank payday borrowers are in debt 175 days per year, the Center for Responsible Lending found in a report last year. Since Wells Fargo and U.S. bank are nationally chartered, they are getting around some state laws that regulate payday lenders, according to the Minneapolis Star-Tribune. Wells Fargo and U.S. Bank also have financed some of the largest payday lenders in the country. Wells Fargo has financed Advance America (with 2,313 stores), Ace Cash Express (with 1,200 stores), Check into Cash (with 1,100 stores), Check 'N' Go (with 1,000 stores), Cash America (with 655 stores), EZ Corp. (with 450 stores), Dollar Financial/Money Mart (with 312 stores), and First Cash Financial/Cash & Go (with 226 stores), according to the Minnesota report. U.S. Bank also has financed Advance America, Cash America, and EZ Corp., the report says. Still, Wells Fargo and U.S. Bank told the Star-Tribune on Monday that they do not engage in payday lending. They said their services are called "checking account advances" or "direct deposit advances." Meanwhile, some states are trying to crack down on payday lenders. Some Rhode Island Democratic lawmakers are pushing to cut the maximum annual interest rate that payday lenders can charge to 36 percent from 260 percent, according to the Providence Journal. Through a proposed ballot initiative, Missouri's secretary of state also wants to cap the annual interest rate charged by payday lenders at 36 percent, according to the Kansas City Star. A county judge recently ruled that the proposed ballot initiative's summary was "inadequate," but Missouri's secretary of state plans to appeal the decision. 6

Report Rips Banks on Payday Loans

A Minnesota group claims four banks, including Wells Fargo and U.S. Bank, charge as much as 365 percent interest on such loans.

Jennifer Bjorhous | Star Tribune | April 17, 2012

As regulators crack down on storefront and Internet payday lenders, a new report says four big banks -- including Wells Fargo and U.S. Bank -- are major players in the multibillion-dollar fast-cash industry, charging vulnerable people interest rates as high as 365 percent. In many cases, the four banks charge even higher fees and interest rates for their emergency loans than payday lenders, according to a brief report released Monday by Minnesotans for a Fair Economy. The group names Wells Fargo Bank, Fifth Third Bank, Regions Bank and Minneapolis-based U.S. Bank. The St. Paul-based organization claims that Wells Fargo and U.S. Bank are hiding behind their charters to avoid the sort of regulation other payday lenders face. Formed last year, the group is made up of community groups, faith groups and labor groups such as the Service Employees International Union. "The banks are getting away with something that had drawn legal action on the payday lenders you see on the street," said Kevin Whelan, spokesman for Minnesotans for a Fair Economy. "We hope the leadership at each institution will reconsider these business practices." Wells Fargo and U.S. Bank representatives say they don't engage in payday lending. They call the services "checking account advances" or "direct deposit advances" and offer a list of features that make them different from payday loans. The advances, for example, are only available to people who have checking accounts with the banks and make regular direct deposits into them. San Francisco-based Wells Fargo said another key difference is that, unlike with payday lenders, it doesn't roll over or extend the advances. Instead, the amount is automatically repaid with the customer's next direct deposit, whenever that is. Neither bank actually calculates an annual percentage rate (APR) on interest for the loans, saying they charge straightforward fees. "It's not appropriate to calculate an APR on a flat fee that must be repaid with the next direct deposit," said U.S. Bank spokesman Tom Joyce. 7

U.S. Bank introduced its "checking account advance" in 2006, he said, adding that a 2012 customer survey indicated 96 percent of the customers using it were "satisfied" or "extremely satisfied" with it, Joyce said. According to the Minnesotans for a Fair Economy report, a $500 advance repaid in the typical 10-day term costs $50 at U.S. Bank, which would be an APR of 365 percent. Over at rival Wells Fargo, which has provided such advances since 1994, the fee for the same loan is $37.50, which amounts to an APR of 274 percent. "It is an expensive form of credit and it's not intended to solve long-term financial needs," said Wells Fargo spokeswoman Richele Messick. By one industry estimate, payday lending is a nearly $40 billion-a-year industry in the United States. Payday lenders have been criticized for setting loan terms that keep cash-strapped borrowers in perpetual debt. Nearly one-quarter of all bank advance payday borrowers receive Social Security, according to the Durham, N.C.-based Center for Responsible Lending. Many states, including Minnesota, have been cracking down on storefront and click-for- cash Internet operators. Banks, with their state and federal regulators and federal guarantees on customer deposits, are supposed to be different. Critics say they aren't. Bank advances are payday loans in disguise, they argue, with their short terms, extra high costs and the lenders' direct access to borrowers' accounts. Banks have become more aggressive in marketing such products, said Uriah King, vice president of state policy at the Center for Responsible Lending. Because Wells Fargo and U.S. Bank are federally chartered, they say they're not subject to state laws, he said. "I think that's one of the real troubling [developments] in the last couple of years," King said. The new U.S. consumer watchdog, the Consumer Financial Protection Bureau, has targeted illegal practices among payday lenders as a priority. Its investigation includes the emergency deposit advance products banks offer. Minnesota Attorney General Lori Swanson has sued eight non-bank Internet payday lenders in recent years for charging strapped Minnesotans unlawfully high annual interest rates of up to 782 percent. The state Department of Commerce has taken on a number of out-of state Internet payday lending companies, too. 8

Minnesota law caps the fees that can be charged on payday loans. For loans up to $50, for instance, the cap is $5.50; for loans between $350 and $1,000, the limit is 33 percent annual interest plus a $25 administrative fee. David Wagner, a 36-year-old Minneapolis man with cystic fibrosis, said he used regular payday lenders for years. Last year, he said, he went to U.S. Bank seeking to open a checking account with overdraft protection and a bank employee steered him to the direct deposit advance program. Only later did he realize how expensive it was, he said. He's still using it because he hopes to establish an ongoing relationship with a bank. "I don't have a choice," said Wagner, explaining that he cannot make ends meet with his Social Security check and his part-time work as a home health aide. "The payday loans I get have helped with medication and food for the house, but it doesn't help me get caught up completely," Wagner said. "We almost never get ahead." Jennifer Bjorhus 612-673-4683

Advocates Say US Bank, Wells Fargo Loans Prey on Low-Income Borrowers

Madeline Baran | Minnesota Public Radio | April 17, 2012

ST. PAUL, Minn. A new report claims US Bank and Wells Fargo are preying on low-income customers by offering short-term loans with steep fees. The report by the group Minnesotans for a Fair Economy claims the fees are the same or worse than charges imposed by traditional payday lenders. Minnesotans for a Fair Economy, which includes community, faith and labor groups, has asked Wells Fargo and US Bank to stop offering the loans. "This product is a debt trap. That's it. It's designed for profit and we see the pain that it offers," said Darryl Dahlheimer, program director at Lutheran Social Service Financial Counseling, who supports the group's efforts to persuade the banks to stop offering the loans. The loans are offered to customers at US Bank and Wells Fargo who have a bank account in good standing and receive paychecks, Social Security checks, or other income via direct deposit. Customers can request up to $500 in a cash advance without completing an application or meeting with a personal banker. The banks then take the loan amount, plus fees, from the next direct deposit. The cash advances come with considerable fees. US Bank charges $2 for every $20 borrowed - a 10- percent fee. Wells Fargo charges slightly less $1.50 for every $20. Customers pay the same fee regardless of whether they pay the loan back in a day or a month. US Bank requires customers to pay back the advance and the fees within 35 days.

For example, a US Bank customer who takes out a $100 cash advance pays $10 in fees. If the customer pays the loan back in 10 days, the fees are the equivalent of a 365 percent annual interest rate, the report said. Kevin Whelan, spokesperson for Minnesotans for a Fair Economy, said he does not know of any other banks that offer similar loans. Officials at TCF Bank and Bank of America told MPR News they do not offer this type of loan. Wells Fargo and US Bank declined to provide information about how many customers rely on cash advances and how frequently customers use the advances. A 2011 report by the nonpartisan research and policy group Center for Responsible Lending found that nearly one-quarter of all consumers who use bank payday advances receive Social Security. It also found customers who rely on the loans are in debt for 175 days a year on average. The group compiled the statistics using nationwide checking account data from a private research firm. US Bank spokesperson Nicole Garrison-Sprenger declined an interview request. In an email, she said the bank's product, known as Checking Account Advance, "is a safety net for customers who have no other way to pay for unexpected expenses such as a medical emergency or an auto repair." The bank is upfront about the costs, she said, and informs customers of lower-cost options that might be available. It also provides what Garrison-Sprenger called "mandatory 'cooling off' periods" to prevent customers from relying too frequently on the short-term loans. Some consumer advocates say the limits are not effective. US Bank allows customers to take out cash advances for nine consecutive statement cycles. After that, the bank imposes a 90-day "cooling off period" before allowing customers to begin borrowing again. Wells Fargo allows customers to receive cash advances for six consecutive statement periods. After that, the bank reduces the amount a customer can borrow by $100 per month until the amount reaches zero. However, the bank offers an option to get around the restriction, which it notes on its website. "You can avoid this reduction in your standard credit limit if you do not take a new advance for one complete statement period at any time," the website says. Wells Fargo spokesperson Richele Messick said the bank is transparent about the high fees and intends the loans to be used only in emergencies. She notes that Wells Fargo provides a monthly payment plan for some customers who cannot pay back the advance within 35 days. "It is an expensive form of credit that is not intended to solve longer-term financial needs," Messick said. "And we have policies in place to help ensure that our customers do not use direct deposit advance as a long-term solution."

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Messick said the cash advances differ from traditional payday loans because the bank does not allow customers to roll-over debt from month to month. Customers have to pay back the loan and fees before they can borrow again. But Dahlheimer, at Lutheran Social Service, said the distinction is irrelevant. "Talk about splitting legal hairs, my goodness," he said. Dahlheimer said that for low-income consumers who receive financial counseling at Lutheran Social Service, cash advances are often the first step to a ruinous cycle of debt and bankruptcy. Customers might receive quick cash up front, he said, but when part of their next paycheck or Social Security check is used to pay back that debt, customers will often have trouble paying that month's bills. Customers will then request another cash advance for the next paycheck, he said. In the long run, when customers have reached the limit for cash advances or cannot pay back the amount owed, they face bounced checks, overdraft fees, and poor credit, he said. "It's like throwing gasoline on the fire of indebtedness," Dahlheimer said. "People who are fairly desperate, who have poor credit, can't have access to traditional loans, it's like having a product out there like an accelerant, which is what arsonists use, to make the problem much, much worse quicker." Banks are not subject to state laws that regulate traditional payday lenders, according to Wells Fargo and organizers with Minnesotans for a Fair Economy. Opponents of the loans have contacted federal regulators to ask for a ban on bank payday loans. Local community groups have also met with US Bank to ask them to stop offering the loans, said Whelan, the Minnesotans for a Fair Economy spokesperson. "We think that US Bank and Wells Fargo, just because they care about their image in the community and want to do the right thing, should design products with fees that offer short-term credit on fair terms and not these exorbitant and predatory terms," Whelan said.

MN Group Claims Big Banks Using Payday Loans

Mark Reilly | Minneapolis St. Paul Business Journal | April 17, 2012
An advocacy group is criticizing a roster of big banks, including Wells Fargo and U.S. Bancorp, for using 'payday'-style loans while avoiding the scrutiny that the payday-loan sector has drawn from regulators. The Star Tribune reports on the dispute, which also cropped up last year. The banks say they're not offering payday loans, but "direct deposit advances," while the group, Minnesotans for a Fair Economy, says the result is the same consumers get trapped under debt and high interest rates. Minnesota has cracked down on Internet-based payday lenders in recent months. 11

U.S. Bank, Wells Fargo Criticized for High-APR Loans

A local advocacy group released a report stating that four large banks, including U.S. Bank and Wells Fargo, are charging people interest rates as high as 365 percent. Nataleeya Boss | Twin Cities Business | April 17, 2012
St. Paul-based advocacy group Minnesotans For a Fair Economy has criticized four large banks, including U.S. Bank and Wells Fargo, for charging customers exorbitant ratesas high as 365 percenton loans that resemble payday loans. In a report released Monday, the group said that while regulators are constantly cracking down on smaller payday lenders for charging customers higher fees and interest rates than allowed by Minnesota law, four large banks charge even higher rates for their emergency loans. In addition to Minneapolis-based U.S. Bank and San Francisco-based Wells Fargo, which has a major Minnesota presence, the group also named Fifth Third Bank and Regions Bank in its report. The banks are getting away with something that had drawn legal action on the payday lenders you see on the street, Kevin Whelan, spokesman for Minnesotans for a Fair Economy, told the Star Tribune. We hope the leadership at each institution will reconsider these business practices. The group called out U.S. Banks checking account advance service, which charges customers $2 for every $20 borrowed, and Wells Fargos direct deposit advance that charges $1.50 for every $20 borrowed. Because the terms of these loans are so shorttypically 10 days they amount to extremely high annual percentage rates (APRs): 365 percent at U.S. Bank and 274 percent at Wells Fargo, according to the report. However, U.S. Bank and Wells Fargo representatives told the Star Tribune that these advances are different from payday loans because they are only available to people who have checking accounts with the banks and make regular direct deposits into themand because the advances are automatically repaid with the customers next direct deposit. In addition, both banks claim that they dont actually calculate an APR on interest for the loans because they charge straightforward fees instead. Its not appropriate to calculate an APR on a flat fee that must be repaid with the next direct deposit, U.S. Bank spokesman Tom Joyce told the Minneapolis newspaper. U.S. Bank reportedly introduced its checking account advance service in 2006. A 2012 customer survey found that 96 percent of the customers using it were satisfied or extremely satisfied with it, Joyce said. 12

U.S. Bancorps Money Talks (OPINION)

Candice Wheeler | Minnesota Daily | April 25, 2012
Ive been screwed over by my bank a handful of times due to obscene overdraft fees a charge that can be as much as $35 each day it goes unpaid. U.S. Bank and Wells Fargo are offering their customers who receive paychecks via direct deposit the option of short-term loans to act as a safety net to catch those fees before they skyrocket. Some people rely on these types of loans, which charge a 10 percent fee, to get them out of their financial binds. The advocacy group Minnesotans for a Fair Economy is calling these paycheck loans an unavoidable debt trap for low-income borrowers. The group has also criticized the banks for their lack of foreclosure assistance in mainly black and Latino neighborhoods. Last years $452 million in total mortgage revenue was an all-time record for U.S. Bank. In their first quarter of 2012, U.S. Bank recorded a net income of $1.3 billion 9 percent higher than 2011. These figures are driven by a 7-percent growth in net interest income and an 11 percent growth in fee revenue. But cash advances, despite the high fees, can be helpful when used as a safety net for faulty pending transactions that often lead to an overdraft. In 2011, customers paid approximately $31.6 billion in overdraft fees. U.S. Bank allows customers to use the loans continually for up to nine months, followed by 90-day break before they can start up again. Theres no doubt these advances could send those who are financially unstable into a habitual cycle of debt; any loan or credit card could. But there isnt necessarily any harm in offering the loans. Its essentially the customers decision whether or not to utilize the funds, and its reassuring to have that emergency cash available at my fingertips. Candice Wheeler welcomes comments at cwheeler@mndaily.com.

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Shareholder Spring: U.S. Bank and Wells Fargo

Los Angeles Times | Protesters Disrupt Wells Fargo Shareholder Meeting Mother Jones | Wells Fargo Turns Away Its Own Shareholders From Its Shareholder Meeting Star Tribune | U.S. Bancorp Ride Mortgage Surge KSTP TV | Tax Day Rally Focuses on Banks, Wealthy Americans WCCO Radio | Protesters Gather at U.S. Bank Shareholders Meeting The Uptake | U.S. Bank and Wells Fargo Throw Families onto the Street [In the print and online editions of the Los Angeles Times, a photo featuring SEIU Local 26 activist Gerardo Cajamarca was included. Cajamarca was part of our Minnesota delegation. The photo is included below.]

Protesters Disrupt Wells Fargo Shareholder Meeting

Despite the tumult, Wells Fargo said 96% of investors casting nonbinding "say on pay" votes supported CEO John Stumpf's $19.8-million compensation package. E. Scott Reckard | Los Angeles Times | April 25, 2012
SAN FRANCISCO Wells Fargo & Co. Chief Executive John Stumpf got to keep his pay, but little else went the banker's way during an acrimonious annual shareholder meeting. 14

 Demonstrators swarmed the Merchants Exchange Building in San Francisco's financial district to protest the bank's lending and foreclosure policies. Some shareholders couldn't get into the meeting as the crowd, which police estimated exceeded 1,000 people, shut down nearby streets. Inside the meeting, Stumpf was disrupted by protesters who made it into the auditorium: "The time for talk is over," said Richard Smith, an Episcopal priest in the low-income Mission District who urged Wells Fargo executives to show compassion for struggling borrowers. Despite the tumult, shareholders voted to embrace Stumpf's stewardship. The bank said 96% of investors casting nonbinding "say on pay" votes supported the CEO's $19.8- million compensation package. He's earned about $60 million over the last three years. That's in sharp contrast to Citigroup Inc. shareholders' vote last week against CEO Vikram Pandit's $14.9- million pay package for 2011. The difference between Citi and Wells Fargo might reflect the banks' comparative performance during and after the financial crisis. Citi required two government bailouts to survive, and its stock still languishes at less than 10% of its pre- crisis high. Wells weathered the crisis in far better shape and has recovered more than 90% of its pre- crisis share price, with its profits now approaching record levels. Demonstrators, many from the Occupy Wall Street movement, say Wells Fargo's success has come at its customers' expense. They demanded that Wells Fargo halt foreclosures, divest investments in prison- management companies, end high-interest payday lending and forgive debts of struggling borrowers with underwater mortgages. 15

Eight demonstrators were cited for trespassing after causing disruptions at the meeting or in the streets outside, San Francisco police said. One long-haired, bearded man who identified himself as Stardust was led to a sheriff's van with his hands bound behind him, protesting: "I have a legal proxy to enter and they refused me." The protesters operated under the "99% Power" banner, referring to those not among America's highest income earners. They included labor groups, community activists and a coalition of 30 San Francisco religious leaders who led a prayer session with readings from the Bible and Koran. "Do not profit by the blood of your fellows," said a Torah quotation read by Camille Shira Angel, rabbi of a Reform synagogue. Protesters also pushed a mock stagecoach reading "Hells Fargo" through the streets and shouted through a loudspeaker next to a giant, cigar-smoking inflatable rat: "The 99% have arrived at the building. The 1% are not getting in." But in the end the demonstrators complained they couldn't get into the meeting. Marguerite Young, a service workers union organizer, said Wells Fargo had allowed entry by only 20 or 30 of more than 200 protesters who had bought shares of the bank's stock. Wells had packed the ballroom with workers from its offices early in the day, she said. "The rest of the room about 250 people are their own employees, members of the board and officers," she said. Wells spokesman Ancel Martinez said access had been restricted as a matter of security. "San Francisco P.D. made the call that we needed to shut it down," he said. Martinez said it was the first time in memory that there had been no questions at an annual meeting. It lasted 45 minutes, compared with 21/2 hours last year. scott.reckard@latimes.com

Wells Fargo Turns Away Its Own Shareholders From Its Shareholder Meeting
Josh Harkinson | Mother Jones | April 24, 2012
"I would not want to work for Wells Fargo," one woman on lunch break in downtown San Francisco loudly told her friend. No kidding. At around noon today, some 2,000 activists launched a blitzkrieg against the bank's annual shareholder meeting at the Merchants Exchange Building, where they blocked entrances, inflated a two- story cigar-smoking rat in the street, and deployed hundreds of shareholder activists to pack the joint. 16

Citing space constraints, the bank turned away many of the shareholders, a move protesters quickly decried as an illegal attempt to dodge tough questions. A press release from the activist group the Alliance of Californians for Community Empowerment claimed Wells Fargo packed the meeting with its own employees, and continued to let shareholders who were not part of the protest in through a side door. A Wells Fargo spokesman did not immediately return my call. In the building lobby, I ran into Wells Fargo shareholder Andrew Constans, who was wearing a suit and tie and holding a paper copy of his single share of stock. The 19-year-old University of Minnesota student flew halfway across the country to tell Wells Fargo that it should pay more taxes. (Between 2008 and 2010, Wells Fargo paid none, but got $681 million in tax credits.) "I pay taxes, so why can't they?" Constans asked. "I'm not a multinational corporation; I don't have 60 tax shelters." The Wells Fargo protest is part of an effort on the part of 99% Power, a coalition of dozens of labor and community groups that plans to target some 40 corporate shareholder meetings over the next six weeks. "It's a broader group than normally does shareholders meetings," says Stephen Lerner, an executive board member with the Service Employees International Union. "It's a campaign that's saying, let's gather all the folks who are impacted negatively by these giant corporations and lets figure out ways to illustrate that and challenge them directly at the meetings." That strategy was on full display today in downtown San Francisco, where demonstrators hit Wells Fargo from every possible angle. A speaker with the immigrants rights group Causa Justa pointed out that Wells Fargo is a shareholder in Corrections Corporation of America, a private prison firm that profits from detaining illegal immigrants. Bob Donjacour, a freelance computer programmer and member of Occupy San Francisco, held a sign that said, "Stop Funding Dirty Power," highlighting the bank's investments in oil and gas. Other protesters criticized Wells Fargo's involvement in the American Legislative Exchange Council, the excessive salary of CEO John Stumpf ($19 million in 2010), and, of course, its foreclosure practices. On the corner of Pine and Sansome Streets, I ran into artist Cheryl Meeker, a member of an Occupy-related protest group known as Don't Just Click There. "It's about doing things in real life, like, physically," she explained. She was blocking the intersection with a long cloth banner with flames on it as others held up signs reading, "Hells Fargo." "Do you think we can get through?" asked two guys in nice suits. 17

Meeker declined, but did give each of them a dollar bill. It sported an image of humans pulling a stagecoach with the caption: "Debt slavery." According to press reports, 24 people were arrested at the protests, including several who disrupted the shareholder meeting from within. Meanwhile, Wells Fargo announced record profits and awarded CEO John Stumpf a $19.8 million pay package.

U.S. Bancorp Ride Mortgage Surge

Revenue growth at the Minneapolis-based bank was the strongest in two years. Earnings rose 28 percent, but shares rose only 1 percent. Jennifer Bjorhous | Star Tribune | April 18, 2012
U.S. Bancorp beat Wall Street estimates Tuesday on strong overall loan growth plus a surprising surge in mortgage activity. Although profits dropped a skosh from the previous quarter, when the bank benefited from a one-time settlement gain, they were up 28 percent from a year earlier to $1.3 billion, or 67 cents per share, topping Wall Street expectations for 64 cents. The Minneapolis-based bank saw revenue jump 9 percent in the first quarter over a year ago, to $4.9 billion, its strongest revenue growth in two years. The increase reflects a 7.3 percent rise in net interest income and an 11.3 percent jump in non- interest income, mainly driven by strong mortgage banking. The lender also boosted income by about $90 million by setting aside less to cover bad loans. Except for higher-than-expected earnings, results were "right down the fairway," analysts at Robert W. Baird & Co. said in a research note. U.S. Bank shares closed Tuesday at $31.55, up about 1 percent. U.S. Bank is regarded as one of the country's most profitable and best-run big banks, and already-high investor expectations likely muted reaction to the lender's solid earnings report. Investors were also likely concerned about fee income from debit and credit cards, said Erik Oja, banking industry analyst at S&P Capital IQ. "I think that was much worse than expected, which is one reason why the stock isn't up that much today," Oja said. Oja said he was concerned about the bank being able to maintain the mortgage pace as it cashes in on the boom in people refinancing their mortgages. The $452 million in total mortgage revenue is an all-time record for the bank, he said, and about twice what it usually makes. "It's unsustainable, but it's really good," Oja said.

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In a conference call with analysts, U.S. Bancorp CEO Richard Davis said the company has been strategically taking mortgage business from smaller banks and larger banks backing away from that sector. It's a market share opportunity "you only get once in a lifetime," he said. The bank's other source of revenue, net interest income, saw growth driven by investment securities, a change in the classification of credit card balance transfer fees as interest income and a 6.4 percent rise in average total loans, including residential mortgages, commercial loans, credit card loans and commercial real estate loans. Its mortgage loan volume grew by 20 percent, and its commercial loan volume, which includes loans to small businesses, rose 17 percent. The bank's credit card balance was boosted by its acquisition of a $700 million portfolio of credit cards from Bank of America. Analysts said it's difficult to know just how much of the bank's overall loan growth is organic, as opposed to taking business away from competitors. Davis told analysts that U.S. Bank expects to recoup by year's end about half the revenue it has lost from various new federal regulations, such as a cap on what banks can collect on debit card swipes. Without elaborating, he said part of that recovery will come from "some increase in certain fee categories." "We're going to be very careful," he said. David also indicated the bank may make more acquisitions in other banks, or corporate trust and payment operations. The bank announced last month that it will raise the dividend payout for shareholders 56 percent to 78 cents per share from 50 cents annually. It also said it will buy back 100 million shares of common stock over the next year. It repurchased 16 million shares in the first quarter. At the bank's annual shareholders meeting Tuesday in downtown Minneapolis, Davis fielded several questions from attendees on foreclosures, taxes and the critical need for banks to facilitate wire transfers of money to Somalia, a major issue for the Somali community in Minnesota. Many of the people asking questions were linked to a St. Paul-based activist group called Minnesotans for a Fair Economy, a coalition of community, faith and labor groups that also organized a protest outside the meeting. 19

 On Monday, the group issued a short report critical of the expensive short-term, emergency advances that both U.S. Bank and Wells Fargo make to customers with direct deposit checking accounts, accusing them of making payday loans that take advantage of vulnerable people. Jennifer Bjorhus 612-673-4683

Tax Day Rally Focuses on Banks, Wealthy Americans

Scott Theisen | KSTP TV | April 17, 2012

Some Minnesotans used this tax deadline day to protest banks and wealthy Americans, who they say don't pay their fair share in taxes. The group Minnesotans for a Fair Economy led a rally outside the Minneapolis Convention Center, where U.S. Bank held its annual shareholder meeting. Protesters say the banks are holding onto their profits too tightly and not doing enough to help average Americans.

Protesters Gather at U.S. Bank Shareholders Meeting

Chris Simon | WCCO Radio | April 17, 2012

MINNEAPOLIS (WCCO) Protestors gathered Tuesday morning outside the Minneapolis Convention Center, where shareholders of the Minneapolis-based U.S. Bank were scheduled to start their annual meeting. The group Minnesotans For a Fair Economy is using Tax Day to underscore the demand that big banks do more to help the 99 percent. Kevin Wayland, with the group, says a number of Americans are unhappy with how rich corporate America and politicians have gotten away with creating economic turmoil. People are going to rally outside here of the U.S. Bank shareholders meeting, and they will then march down to the Wells Fargo headquarters and ask that the banks that got billions in bailouts start paying their fair share of taxes and stop lobbying for loopholes and tax breaks for CEOs and big, bailed-out banks, said Wayland. He said the groups demand is that banks like U.S. Bank and Wells Fargo stop lobbying for the interests of the so-called 1 percent and begin to act on behalf of the communities that they serve. 20

U.S. Bank and Wells Fargo Throw Families onto the Street
Jacob Wheeler | The Uptake | April 17, 2012
If US Bank and Wells Fargo truly care about this community, why are they so intent to throw families out on the street, and empty the neighborhoods of Minneapolis, asked SEIU activist Mark Freeman at a spirited Tax Day rally in front of Wells Fargos headquarters. Meanwhile, activists with Minnesotans for a Fair Economy, homeowners who have taken the Occupy Homes pledge to stay in their foreclosed properties, and Somali Americans who are unable to transfer money to families in their war-torn homeland, successfully penetrated US Banks shareholders meeting at the Minneapolis Convention Center. They peppered CEO Richard Davis with demands that US Bank pay more in taxes and negotiate with homeowners facing foreclosure whose mortgages are or were at one time controlled by US Bank. Pressure on big banks working The 99% have been putting pressure on US Bank and other big banks for months now and its working, said John Vinje, whose Bloomington, Minnesota, home is at risk of being sold through a sheriffs sale. We will stay in our home and want to find a solution with the bank. Im here today to appeal personally to the CEO of US Bank, asking him for his assistance in making sure that happens. US Bank and their leaders who are here today have the ability to restore the lifeline to Somalia, said Ibrahim Nur, an activist who works with the local Somali community. While members of their staff have met with us, we still do not have a solution. Each day that this crisis continues, more and more of our families suffer. Monique White, a North Minneapolis homeowner and single mother who faces foreclosure even though she works two jobs, has become a catalyst for the Occupy Homes movement, in Minneapolis and nationwide. During a shareholder question and answer session, White asked Davis for US Bank to renegotiate her mortgage, which is currently in the hands of the lending company Freddie Mac. Davis reportedly gave her a curt response, but offered to meet with White after the shareholders meeting. He did so, and reportedly offered to have his Vice President look further into her case. [See photo below: Interview with Monique White to come later tonight.] While Richard Davis addressed US Bank shareholders and activists posed as shareholders approximately 200 demonstrators marched from the Convention Center, down Nicolet Mall, to Wells Fargos headquarters, where they held a spirited rally, posted a bill for $21.6 billion Wells Fargo owes the 99%, and asked the bank to pay its fair share in taxes. Leading them on the march through downtown Minneapolis were caricatures of Richard Davis and Wells Fargo Vice President Jon Campbell, riding on a horse-drawn carriage and taunting pedestrians on the street for paying more in taxes than they do. 21

CTUL Press Conference

April 25, 2012

We, the workers who clean different stores like Kmart, Sears, Best Buy, Target, and others, contribute to the prestige of these stores through our workBut what happens with us, the workers who carry out the cleaning work? The stores contract different companies like Diversified and Carlson among others, who then overwork and underpay the cleaning workers. Alejandro Quirino, Diversified Maintenance worker. Star Tribune | Janitors: Contractor Didnt Play by Rules Workday Minnesota | Study, Lawsuit Expose Exploitation Faced by Retail Cleaning Workers

Janitors: Contractor Didnt Play by Rules

Cleaners at big-box stores file a lawsuit, saying their boss didn't pay overtime. Dee DePass | Star Tribune | April 26, 2012
A group representing janitors hired to clean big-box retail stores in the Twin Cities released a report Wednesday alleging industrywide abuses by their employer, Diversified Maintenance Systems, for failing to pay mandatory overtime and threats of firing. The national report, commissioned by Centro de Trabajadores Unidos en Lucha (Center for Workers United in Struggle) and the Service Employees International Union, was unveiled on Nicollet Avenue in Minneapolis in front of a Kmart store. Other retailers that contract with Diversified Maintenance include Target and Best Buy. Stephen Philion, St. Cloud State University's director of the Faculty Research Group on Immigrant Workers in Minnesota, read parts of the report, which detailed U.S. Department of Labor investigations spanning 10 years. It also outlined lawsuits against commercial cleaning firms that specialized in retail stores. Philion cited cases in which paychecks bounced, where Latino janitors were forced to pay managers a "deposit" to get hired and where workers weren't paid overtime. In October, 12 Twin Cities janitors sued Tampa-based Diversified Maintenance in U.S. District Court in Minneapolis for 22

allegedly failing to pay qualifying workers overtime, a claim the company denied. "We do not agree with those allegations and we have evidence to the contrary," said Diversified attorney Phillip Russell from the law firm of Ogletree Deakins in Tampa. "We are vehemently denying their case and we will do so in court." Russell took issue with the plaintiffs and their attorney holding a press conference. "It's disappointing. It's not a very professional way to litigate a case," Russell said. Plaintiffs attorney Michael Healy told the crowd of about 40 that two more plaintiffs joined the suit, which he seeks to get certified as a class action. Along with Healy, 10 DMS janitors came Wednesday to share their stories. Flanked by union members, attorneys and immigrant advocates, the janitors said they were hired by DMS to clean Target, Best Buy or Kmart stores around the Twin Cities. They alleged being made to work seven days a week with no overtime pay. Royce Reder, who spent five years cleaning the same Kmart store where he stood, said a DMS manager recently told him he had to work four-hour shifts for seven days a week instead of his usual five-day, 40- hour shift. If he refuses, "I will lose my job," said Reder, who has not joined the lawsuit. Leticia Baeza, who joined the suit in October, said she was made to work seven-day weeks without overtime. She estimates she is due $26,000. Dee DePass 612-673-7725

Study, Lawsuit Expose Exploitation Faced by Retail Cleaning Workers

Workday Minnesota | April 26, 2012
MINNEAPOLIS - The workers who clean major retail stores like Kmart, Target and Best Buy often face shocking conditions of exploitation, including heavy workloads, long hours and lost wages, according to a new study of the industry and a lawsuit against a major cleaning contractor. The information was released Wednesday by CTUL, Centro de Trabajadores Unidos en Lucha/the Center for Workers United in Struggle, a community organization that works for fair wages and better conditions for retail cleaning workers, many of whom are recent immigrants. Last fall, workers employed by Diversified Maintenance Systems, a cleaning contractor for retail stores including Kmart, Target, and Best Buy, filed suit, charging that the cleaning contractor required them to work up to 80 hours a week without overtime pay. Diversified Maintenance has been the subject of at least six private lawsuits and an investigation by the U.S. Department of Labor over its failure to pay overtime wages. The lawsuit can be downloaded at this website. 23

I worked for Diversified for about three years, seven days a week, eight hours a day, Maria Cruz, one of the workers who brought the lawsuit, said at Wednesdays news conference. I was told by management that I had to punch in five days with my name and employee number. For the other two days I was told to punch in with the name and number of a ghost employee. I was then paid cash for those days, but I was not paid at the overtime rate. Over three years, thats a lot of money,

Members of CTUL spoke out about the conditions facing retail-cleaning workers at a news conference Wednesday. At the same news conference, CTUL released a report indicating low wages and other problems pervade the retail janitorial industry in Minnesota and throughout the United States. The report, Dirty Business: Worker Exploitation in the Retail Janitorial Industry can be found at the CTUL website. The report shows that many of the cleaning contractors hired by retail stores in Minnesota and throughout the United States regularly failed to pay overtime to janitors who work well in excess of 40 hours a week. "This study sheds light on the reality faced by thousands of retail cleaning workers around the country as well as here in the Twin Cities, citing multiple examples of federal lawsuits and United States Department of Labor investigations that have happened in the industry regarding unpaid overtime wages, all taking 24

place over the past decade. It is shocking to learn that such conditions exist in the shadow of stores like Kmart and Sears, said Stephen Phillon, associate professor of sociology at St. Cloud State University, who reviewed the findings. As a sociologist who studies the social conditions of immigrant labor in Minnesota, Phillion continued, this white paper stands out as a powerful one precisely because methodologically it pulls together relevant data from relevant government agencies, Minnesota retail cleaning workers who have directly experienced the consequences of intensified and out-of-control national and global competition, and even industry officials themselves. " According to the report, department stores and supermarkets contract out their janitorial work seemingly to cut costs and avoid responsibility. There is fierce competition among the janitorial companies for these contracts, with each company trying to underbid the other. Since labor is by far the largest and most costly expense in a cleaning contract, the company with the lowest labor costs tends to win the contract. In some cases, workers believe the janitorial companies try to minimize their labor costs with practices such as not paying overtime or by requiring employees to get more work done in a shorter period of time. I held two jobs because of the low wages. We work in a place filled with food and yet we can barely feed our families, said Mario Colloly Torres, who used to clean a supermarket and now works with CTUL. "They look for a cleaning company that is going to give the lowest price for the work. The result for us: lower wages and increased workloads. The report argues that contractors count on the predominantly immigrant workforce not being aware of their rights or being afraid of retaliation if they complain. In one case, a Philadelphia cleaning company even went so far as to enslave their workers and to threaten the workers and their families with physical violence if they try to escape. The report will be distributed to elected officials and other decision-makers, CTUL said. The lawsuit against Diversified Maintenance Systems is currently in the discovery phase, attorney Michael Healey said, and may go to trial in about 18 months. 25

ISAIAH Prophetic Voices Conference

April 26, 2012

Faith based organizations ISAIAH, Jewish Community Action and the Stairstep Foundation convened a gathering of 250 faith leaders from 150 congregations in St. Paul on Thursday, April 26 to launch a statewide Prophetic Voices Campaign" that will engage congregations and clergy to "vote on values." The effort will unite congregations under a common a five-point values statement to address issues including voting rights and racial disparities in education, health care and jobs during and after the state's 2012 legislative elections. ISAIAH will also work with 15 congregations in the western metro suburbs and St. Cloud to contact 25,000 eligible voters in a values-based civic engagement effort. Star Tribune | Minnesota Faith Leaders to Launch Voter Education Campaign

Minnesota Faith Leaders to Launch Voter Education Campaign

Rose French | Star Tribune | April 25, 2012
Some 250 faith leaders from 150 congregations are launching a statewide voter education campaign that will teach people how to view public leaders, candidates and policy. The faith groups ISAIAH, Jewish Community Action and His Works United/Stairstep Foundation will start the Prophetic Voices campaign on Thursday at a day-long conference held at the Crowne Plaza Hotel in St. Paul, according to a released statement from ISAIAH. Every day I see the pain of families losing their homes, their jobs, their health care, and their retirement savings, and Im outraged by the indifference shown by our government and corporate leaders, the Rev. Paul Slack, president of ISAIAH and pastor of New Creation Church in Minneapolis, said in the statement. The campaign aims to engage congregations and clergy under a common prophetic narrative, a five-point values statement that can be agreed upon by most faith traditions. Issues such as the Voter ID ballot initiative and racial disparities in education, health care and jobs will be looked at through a faith perspective. The Prophetic Voices campaign will take place in cities including Alexandria, Duluth, Minneapolis/St. Paul and their suburbs, Northfield, Rochester, St. Cloud, St. Joseph, and Willmar. Congregations from 12 denominations will participate including the Evangelical Lutheran Church of America (ELCA), Church of God in Christ, Pentecostal, Roman Catholic, United Church of Christ (UCC), Presbyterian, United Methodist, Baptist, Episcopal, Unitarian Universalist, Mennonite, and Jewish congregations." 26