Wells Fargo accused of denying loans to immigrants in DACA program

A federal judge in San Francisco has refused to dismiss a lawsuit accusing Wells Fargo bank of denying loans to immigrants who came to the U.S. as youngsters and have been allowed to remain here.

Denial of loans based on citizenship status violates a federal law, passed in 1870, and a California civil rights law, U.S. District Judge Maxine Chesney said Thursday in rejecting the bank’s attempt to dismiss the proposed nationwide class-action suit.

Wells Fargo, according to the suit, has a policy of granting loans only to U.S. citizens or to noncitizens who have become permanent legal residents and have a cosigner who is a U.S. citizen.

The plaintiffs are among more than 750,000 immigrants who entered the United States before age 16, without legal documentation, have gone to high school and were granted work permits and reprieves from deportation by the Obama administration. The program is called Deferred Action for Childhood Arrivals, or DACA, and has an uncertain future under President Trump.

“This is a very significant ruling,” said attorney Victor Viramontes of the Mexican American Legal Defense and Educational Fund, a lawyer for the plaintiffs. “Wells Fargo argued that they could discriminate against DACA recipients, and the judge rejected that.”

Viramontes said other national banks have similar policies. “The entire industry should take note of this ruling and how they are treating people who are not yet permanent lawful residents,” he said.

Wells Fargo, in a statement, said, “While the court’s decision to allow the lawsuit to proceed is disappointing, we are prepared to defend our record as a responsible lender.”

In seeking dismissal of the suit, the bank argued that its policy was allowed by a 1976 federal law, the Equal Credit Opportunity Act, which prohibits discrimination in lending based on race, sex, religion or national origin but does not mention citizenship.

But Chesney said the 1976 law did not repeal additional protections of an 1870 statute — enacted mainly to protect Chinese immigrants in California — that required businesses such as lenders to grant equal contract rights to “all persons within the jurisdiction of the United States.” That meant they could not discriminate against noncitizens, she said.

For California residents, Chesney said, the federal credit law does not supersede the protections of the state’s Unruh Civil Rights Act, which requires businesses to provide equal treatment to all customers and clients, regardless of their immigration status.

The bank also argued that noncitizens might not be good credit risks because they might not remain in the U.S. Chesney said the law recognizes the benefits of a “stable economy,” but she noted that the lawsuit alleged that Wells Fargo had denied a loan to an immigrant who was part of the DACA program and had a U.S. citizen cosigner.

Even if the borrower was deported or disappeared, the judge said, the cosigner would remain responsible for repayment.

Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@sfchronicle.com Twitter: @egelko