by Julie Goodridge

My name is Julie Goodridge and I am the CEO of Northstar Asset Management, Inc. in Boston.

This is the fifth year we have attended these meetings to discuss the company’s predatory lending practices. For five years, we have warned that abusive lending is not sustainable, and would result in the loss of customers’ equity and the loss of shareholder value due to widespread financial defaults. Unfortunately for hundreds of thousands of homeowners, our predictions were not taken seriously and now we have millions of homes under the threat of foreclosure.

Our interest as shareholders in raising these issues, is simply that predatory lending is bad business: it damages corporate reputations and opens liabilities that are measured in the hundreds of millions of dollars. We are asking that the company prepare a report explaining the significant racial disparities in its home mortgage lending business.

In 2005 we brought with us to this meeting a woman from Arizona named Cecelia Campillo. At that time Cecelia was a 67 year old woman with a 78 year old husband. She and her husband had borrowed money from Wells to pay for the college education for their children. Cecelia received a loan of $60,000 that included $7000 in closing costs, plus a $2900 credit insurance policy which they did not want, and for which her husband age precluded them from having. The Wells Fargo sales employee changed her husband’s age on the forms so that the credit insurance would be a part of their loan package. A couple of years later Cecelia went back to Wells to get another loan for home repairs, this time paying $9,000 in fees. Then Cecelia lost her job, a crisis that caused her to exhaust their savings. Facing potential bankruptcy, she left many bills unpaid just so that she could make her mortgage payments. She went to her credit counselor who, after reviewing all of her mortgage documents, found 8 errors made by the original loan officer and approached our company, Wells Fargo. Our company ultimately did the right thing and cut her rate by several percentage points.

Cecelia’s experience reveals that Wells Fargo engages in predatory lending. Cecelia’s experience also reveals that Wells Fargo is willing to right a wrong.

According to data reported by Wells Fargo as required by the Home Mortgage Disclosure Act (HDMA), our African-American customers were 3.69 times, and our Latino customers were 1.82 times more likely than white customers to receive a high cost loan in 2006.

A lawsuit filed by the City of Baltimore this year charges our company with providing 65% of Wells Fargo’s African-American borrowers in Baltimore with high-cost loans.

As shareholders and fiduciaries, we believe that sub-prime, predatory lending practices bump up corporate profits in the short term, but are driven by shortsighted, extraordinary greed on the part of financial institutions like our company, Wells Fargo. We believe that using the American dream of home ownership to boost profits at the expense of the citizens of this country, is egregious and is the cause of the current financial collapse of this country.

We are particularly concerned by the alarming rate at which African-American and Hispanic borrowers have been steered towards high-cost, subprime loans, even in cases where these consumers were eligible for prime loans. According to the Home Mortgage Disclosure Act and other published reports, Black and Latino borrowers from Wells Fargo are more likely to receive more non-traditional mortgage loans than white borrowers, regardless of income levels, debt consideration, or credit scores.

For the past five years, NorthStar and Responsible Wealth have asked Wells Fargo to explain its predatory lending practices. Initially we asked our company, Wells Fargo, to tie executive compensation to ending to sub-prime and predatory mortgage practices. At the time of our initial resolution we had seen Wells Fargo’s sub prime mortgage originations grow from $230 million in 1997 to $16.5 billion. We were concerned about the impact that these mortgages have on low and moderate income families and the reputation of Wells Fargo, and we are even more concerned today.

The whole world has watched this unfold over the past year. Foreclosures are up 60% over last year’s. In California alone, foreclosure activity is up 131% over last year with close to 54,000 filings. In Nevada, one out of every 165 homes is under foreclosure, more than three times the national average. Yet our former chairman, received a compensation package of $18.5 million, while profits at the company dipped 4% and the bank had its first earnings decrease since 2001.

We believe Wells Fargo should not use interest payments and fees deceptively to promote its own financial gain at the expense of its customers. As witnessed in the last year, these practices adversely impact the reputation and value of the company. Wells Fargo has been an exemplary corporate citizen in many ways, but our management jumped on the sub-prime band wagon and our company’s profits will continue to suffer. Had our Board had the foresight to support our initial resolution in 2004, perhaps some of the damage could have been avoided.

Initially, we asked Wells Fargo to tie executive compensation level to ending to subprime and predatory mortgage practices. Our request was ignored. Last year we crafted a new resolution asking for Wells Fargo to account for racial inequities in their sub prime lending practices. Item #10 in your proxy handbook asks our company to prepare a report explaining the racial and ethnic disparities in the delivery of its high-cost, sub-prime loans. The resolution also asks the company to consider whether “the company’s racial and ethnic disparities in high-cost loans affect the home affordability or wealth-building benefits of homeownership for its minority customers.”

We believe strongly that all businesses should be held to a high standard of transparency. The report that our proposal requests puts important information in the public view, allows management to reexamine predatory loan practices and protects our investment in Wells Fargo.

Management argues that this report is unnecessary. We disagree. And we believe Cecelia Campillo and the city of Baltimore would concur.

We ask Wells Fargo’s senior management to take immediate steps to address these concerns, including preparing the report on racial disparities requested by this Resolution. Please join us by voting Yes on Resolution Item #10.