Proposal Linking Executive Pay to Predatory Lending

Exec. Comp. Linked to Predatory Lending

2005 – Wells Fargo & Company

Whereas,

Wells Fargo is one of America's largest sub-prime lenders.

Historically, sub-prime lending has been fraught with predatory lending abuses. Predatory lending has stripped billions of dollars from borrowers who are often low-income, elderly or people of color, through inflated fees, loans made at rates higher than warranted by customers' credit scores, poor disclosure of loan terms, and in some cases, outright fraud. Engaging in these practices can be extremely costly to companies and their shareholders. Within the last three years, Citigroup paid $200 million and Household

International paid $484 million to settle predatory lending complaints.

Wells Fargo, a relative newcomer to the sub-prime lending industry, has already run into significant controversies:

· In 2003, California regulators filed suit against Wells Fargo Financial California seeking approximately $38 million in penalties for failing to meet state disclosure standards when mailing draft loans (also known as "live checks") to prospective borrowers. After Wells Fargo represented that it had corrected the problem, regulators alleged that they found evidence of continued violation and brought "willful disregard" charges in the matter, which is still pending.

· In April 2004, the Maryland Commission on Human Relations subpoenaed Wells Fargo documents in an investigation of predatory lending and fair lending complaints. In June the Louisiana Attorney General issued a civil investigative demand following numerous consumer complaints about Wells Fargo's lending practices

· In June 2004, a class action lawsuit was filed against Wells Fargo in Illinois alleging that the company charged fees on loans of up to 11%, well above the 3% state limit on fees for high rate loans. The same month a representative action was filed in California alleging broad unfair and deceptive lending practices.

· In September 2004, the 2nd U.S. Circuit Court of Appeals in New York, found Wells Fargo in violation of federal law prohibiting mark-ups on fees for such things as credit reports, title work and flood plain certifications.

Wells Fargo lags other major industry players in developing policies protecting borrowers and shareholders from predatory lending abuses. For example, unlike Citigroup and others, Wells Fargo has no clear and public commitment that customers will be charged similar rates no matter which part of the company they do business with. Wells Fargo has not established policies requiring that mortgage refinancings provide net benefits to borrowers, as is the current industry best practice.

Resolved,

Shareholders request that the Board conduct a special executive compensation review to study ways of linking executive compensation to successfully addressing predatory lending practices. Among the factors to be considered in this review are: implementation of policies to prevent predatory lending; evaluation of sub-prime loans by outside auditors for compliance with laws and company policies; constructive meetings with concerned community groups; and reductions in predatory lending complaints filed with government bodies. A summary of this review, prepared at reasonable cost and omitting proprietary information, shall be made available to shareholders, upon request, no later than October 1, 2005.