Wells Fargo Pledges $5 Billion More in Community Financing

Wells Fargo Bank on Thursday pledged an additional $5 billion for affordable housing, economic development and loans to low-income Californians during the next 10 years.

In 1990, the San Francisco-based bank committed $1 billion for community development in California, to be allocated over seven years. But the money was used in less than three years.

“We felt it was appropriate to come up with another goal and up the ante a bit,” said Karen Wegmann, executive vice president in charge of the bank’s community development group.

Wells Fargo’s announcement comes one month after its Los Angeles-based rival, First Interstate Bank of California, pledged $10 billion to low-income, business and community loans during the next 10 years. Bank of America, the state’s largest bank, made a $12-billion commitment in 1991 to provide economic development funds.

Robert Gnaizda, general counsel of the Greenlining Coalition, an umbrella community group that has been negotiating with the banks, said Wells Fargo’s latest action demonstrates that such long-term community financing “makes good business sense, or they wouldn’t renew it.”

Wells Fargo Chairman Carl E. Reichardt said the bank’s initial pledge ran out “faster than we expected, largely due to California’s critical need for small-business financing and the increasing ability of community-based organizations to produce affordable housing projects.”

The latest pledge represents about 10% of Wells Fargo’s $51.2 billion in assets.