Wells Fargo (NYSE:WFC)
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Wells Fargo & Co. (WFC), facing demands ranging from forgiving more mortgage debt and paying more taxes to ending political lobbying, is bracing for thousands to confront the bank at its annual shareholder meeting Tuesday in San Francisco.
A coalition of community and environmental groups that calls itself "99% Power" said it expects more than 100 participants to attend the meeting because they own shares, and the group expects around 3,000 to demonstrate in front of the Merchants Exchange Building, where Wells Fargo is holding its meeting.
According to Maurice Weeks of the Alliance of Californians for Community Empowerment, the group is demanding Wells Fargo increase principal forgiveness as a way to modify delinquent mortgages and help homeowners; pay more taxes; stop financing payday lenders; stop all political lobbying; and divest stock in GEO Group Inc. (GEO), which on its website calls itself the world's largest correctional and detention organization.
Wells Fargo is bracing for the activism. "We are looking forward to holding our annual meeting in San Francisco and our goal is to have it run smoothly," a spokesman said Monday. "Certainly we are taking the necessary precautions to make sure we can hold the meeting safely as well. Yet, we certainly support the right of peaceful assembly."
Wells Fargo has been one of the first, and one of the few, banks to forgive principal on mortgage loans. It says it doesn't own stock in GEO, but holds stock in the company as a trustee for mutual funds, and lends only a small amount to payday lenders. "Every responsible business that complies with the law has equal access to consideration for credit at Wells Fargo," the spokesman said.
Weeks alleged Wells Fargo underpaid taxes by $21 billion over the last four years; the Wells Fargo spokesman said the bank had to digest significant losses following the acquisition of Wachovia Corp. in 2008, which reduced taxable income. Wells Fargo paid $4.8 billion in federal income taxes during the past two years, according to the spokesman.
The planned demonstrations illustrate the renewed pressure community groups are placing on banks following the financial crisis and in response to the ongoing home-foreclosure wave. The Occupy Wall Street protest and last week's rebuke of Citigroup Inc.'s (C) board of directors and management by institutional shareholders like pension funds at the bank's annual meeting has energized corporate critics.
A majority of Citi shareholders refused to ratify the bank's executive compensation at the annual meeting in Dallas last week.
Becky Tarbotton, an executive director of the Rainforest Action Network, called Wells Fargo "one of the worst corporate offenders" when it comes to tax payments and other issues. "The Occupy movements has opened a real space to talk about inequality and corporate power in this country. We are channeling that energy into focused pressure" at annual meetings, she said during a conference call with reporters on Monday.
Wells Fargo, the nation's second largest bank by deposits and the fourth largest by assets, is also the nation's largest mortgage lender and largest mortgage servicer, a business that collects payments and forecloses in the name of investors in mortgage that were packaged in mortgage-backed securities.
Wells Fargo has been a large subprime lender, and its portfolio of subprime mortgages held up well relative to other subprime lenders. But adjustable-rate mortgages made by Wachovia have been defaulting at high rates, particularly the so called pick-a-pay mortgages that gives borrower flexibility in their payment in exchange for higher interest rates. Wells Fargo, like other major mortgage services, got a cease and desist order from its regulators related to botched foreclosures and reached a $25 billion settlement with the U.S. government and the attorneys general of 49 states last year.
-By Matthias Rieker, Dow Jones Newswires; 212-416-2471; email@example.com