Durham community advocate Peter Skillern got a call from Wells Fargo Wednesday letting him know about the bank's $85 million settlement over subprime lending practices. As the conversation ended, he told the bank official he wished he could talk to one of the alleged wrongdoers "so I can get really mad."

After raising alarms for more than a decade, Skillern and other community advocates said the Federal Reserve Board's agreement with the San Francisco-based bank was too little, too late.

The years of waiting for such a penalty highlighted regulators' lax policing of consumer lending laws and the need for the new Consumer Financial Protection Bureau, they said.

"It strikes me as justice delayed is justice denied," Skillern, executive director of the Community Reinvestment Association of North Carolina, said Thursday.

The Fed on Wednesday assessed the civil penalty against Wells over allegations that employees in its now-shuttered Wells Fargo Financial unit steered borrowers into more costly subprime loans when they could have been eligible for less expensive prime loans. Employees also allegedly falsified income information on mortgage applications. The lending occurred between January 2004 and September 2008, before the bank's purchase of Charlotte-based Wachovia.

The civil penalty, which goes to the U.S. Treasury, was the largest-ever levied by the Fed in a consumer-protection enforcement action and the first related to the steering of borrowers into high-cost loans.

The Fed also ordered Wells to pay compensation of $1,000 to $20,000 to borrowers, who could number between 3,700 to more than 10,000. That means the total compensation to borrowers could range from $3.7 million to $200 million.

The Fed has also banned 17 former Wells Fargo Financial employees from the banking industry.

Wells Fargo did not admit to the allegations in the order. In a statement, chief executive John Stumpf said the alleged actions were committed "by a relatively small group of people" who have been terminated. The alleged activities occurred in Florida, New York, Pennsylvania, Tennessee, Texas and New Mexico, the bank said.

Wells spokesman Ancel Martinez declined to comment on the potential total cost of the settlement. "We take these allegations seriously and are pleased to be moving forward addressing the matter," he said.

Community advocates have been raising questions about subprime lending by units of Wells Fargo and other banks for years. Often these protests would occur as the Federal Reserve was weighing whether to approve one of the banks' mega-mergers.

In 1998, Skillern said activists wearing shark noses demonstrated outside a subprime lending unit of Bank of America predecessor NationsBank to highlight "separate but unequal" lending practices. Across the parking lot was a regular NationsBank branch where customers could get prime loans. Bank of America closed its subprime business in 2001.

Matthew Lee, executive director of Inner City Press/Fair Finance Watch in New York, said he submitted evidence to the Federal Reserve for years about Wells Fargo Financial, including an analysis of lending data that showed African Americans were four times as likely than whites to receive high-cost loans in 2009.

"The Fed looked into some, but moved forward and approved the mergers on which the evidence was submitted," Lee said. "Now, belatedly, the Fed issues this fine."

A 2005 Observer investigation found that three large lenders - HSBC Holdings plc, Regions Financial Corp. and Washington Mutual Inc. - made most of their loans to blacks through units that made high-rate loans.

Non-bank subsidiaries of bank holding companies have long avoided Fed scrutiny. It wasn't until September 2009 that the central bank implemented a consumer compliance supervision program for these units, building on a pilot program that began in 2007.

Skillern said he was left unsatisfied by the Wells settlement because no individuals paid penalties and there was no compensation for communities damaged by foreclosures or for counselors who worked with struggling borrowers.

"I continue to wonder when will it end: the continued revelations of our large financial institutions breaking the law and bringing harm to consumers and society," he said.

Stella Adams, a longtime N.C. fair housing advocate, said the agreement didn't address the disproportionate impact on African American and Latino communities. "The Fed has a duty to make whole those who were harmed," she said.

A Fed spokesman declined to comment on the settlement or whether enforcement actions could be in the works against other banks, or individuals.

Wednesday's order could provide ammunition for legal actions against Wells. The cities of Baltimore and Memphis have filed suits alleging Wells Fargo engaged in "reverse redlining" - intentionally targeting minority communities for predatory mortgage loans, leading to high foreclosures in minority neighborhoods.

"We think this bodes well for our case," said Glenn Schlactus, an attorney with Relman, Dane & Colfax, which is representing the municipalities.

Martinez, the Wells spokesman, said the bank continues to defend those suits and "believes its lending practices, and the small number of foreclosures in those cities, were not responsible for the serious urban problems affecting those communities."