Why the Wells Fargo settlement settles nothing

July 17, 2012, 9:09 PM UTC

FORTUNE – Wells Fargo, the nation’s largest home mortgage lender, recently agreed to pay at least $175 million to settle accusations that it discriminated against minority borrowers during the housing boom.

The settlement struck last Thursday with the Department of Justice is important for a few reasons: First, it’s the second-largest fair lending settlement in the department’s history. And, as some have said, it helps disprove arguments that Fannie Mae and Freddie Mac caused the housing crisis by forcing banks to lend to minorities. Clearly, as the Justice Department’s accusations suggest, minorities were pushed into taking out higher-cost loans than white borrowers with similar credit risk profiles.

But for all the applause the settlement has garnered, it’s unclear whether justice has actually been served. And this settlement and others certainly don’t address the credit access woes that many minority households have endured in the aftermath of the subprime mortgage crisis.

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Wells (WFC) was accused of charging higher fees and rates to more than 30,000 minority borrowers. The Justice Department also alleged that mortgage brokers working with Wells steered more than 4,000 minority borrowers into costlier subprime mortgages.

As we recall, such mortgages largely drove the housing crisis and subsequent financial crisis in 2008. Wall Street investment banks turned them into complex bonds and sold them as safe bets to unsuspecting investors. When teaser rates commonly associated with subprime mortgages jumped to much higher rates, homeowners unable to afford their monthly home loan payments defaulted. This brought about the collapse of two major financial institutions and the onset of the deepest economic recession since the Great Depression.

Despite all the damage, there’s been little, if any, accountability over the subprime debacle. As part of Wells’ settlement, the bank admitted no wrongdoing.

Wells isn’t alone. The bank’s settlement follows the Justice Department’s biggest fair lending settlement in which Bank of America agreed in December to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against minorities. Like Wells, BofA admitted no fault. And like BofA (BAC), SunTrust Banks (STI) in May denied wrongdoing when it agreed to pay $21 million to resolve similar allegations.

The Justice Department is currently investigating 15 other matters involving fair lending, an official with the department said Monday. Looking forward, it will be worth watching if such investigations will bring about any civil, or even criminal, charges.

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True, the latest fair lending settlement tries to compensate some borrowers, but it doesn’t exactly make up for the massive subprime mortgage fallout. And while peddling costlier mortgages to minorities was a major problem during the housing boom, the bigger issue today (and perhaps in the coming years) is access to credit, responsible lending advocates say.

While white families have accounted for the vast majority affected by foreclosures, the housing crisis has disproportionately hit black and Hispanic borrowers, as these groups were more likely to receive high-risk loans during the housing boom, according to the Center for Responsible Lending. In a November 2011 report, the center found that approximately 25% of all Hispanic and black borrowers lost their home to foreclosure or are seriously delinquent on their mortgages, compared to just under 12% for white borrowers.

As a result, it will take years before these groups can rebuild their credit, decreasing the likelihood that they will be able to take out another mortgage, especially as lending standards at banks remain tight.

“This could have long-term repercussions,” said Janneke Ratcliff, executive director of University of North Carolina at Chapel Hill’s Center for Community Capital, which studies the impacts of financial services on U.S. households, particularly low-income and minority groups. “If a household wants to buy a home at a time of great affordability they’re going to miss out on the opportunities.”

So while the slew of settlements might compensate some borrowers, they’re little more than paltry payouts in the grand scheme of things. The settlements don’t solve the many other problems minority borrowers could face down the road.