America’s largest banks committed over $32 billion after George Floyd’s murder. While many have made significant progress, Wells Fargo seems to be going backward.
A History of Scandals
Wells Fargo hasn't earned the title of being the most trustworthy financial institution. They have had a long history of scandals, from creating fake accounts to discriminatory practices. Here is an overview of their biggest scandals in chronological order.
2013: A group of Black financial advisors sued the bank for racial discrimination, claiming they were pushed into poor neighborhoods and kept from working with new clients and partnering with white financial advisors. In 2017, Wells Fargo settled the lawsuit paying almost $36 million to 320 people.
2016: Due to corporate pressuring bank employees to meet sales quotas, with extreme consequences (like being fired) if they didn’t meet them, employees began opening accounts, credit cards, and loans for their customers without their knowledge.
2018: Sacramento sued Wells Fargo, claiming that minority borrowers were being put into high-cost loans due to their race/ethnicity. Black borrowers with FICO scores over 660 were 2.8x more likely to get high-cost or high-risk loans than white borrowers. Latino borrowers were 1.8x more likely.
2020: Wells Fargo CEO Charles Scharf released a company-wide memo blaming the lack of diversity on a “very limited pool of Black talent.”
2022: Bloomberg released a report showing that only 47% of Black homeowners were approved for a refinancing loan versus 72% of white applicants.
2022: The bank was accused of conducting interviews with “diverse” candidates after the position had already been filled to meet the requirements that a diverse candidate has to be interviewed for all open jobs paying more than $100,000 a year.
Commitment to Diversity, Equity & Inclusion
Since the murder of George Floyd, Wells Fargo pledged $450 million towards supporting the Black community. According to a spokesperson for the bank, they have spent $275 million of that so far as of May 2022. While $450 million may seem like a nice chunk of change compared to their competitors, it’s pocket change.
As the 2013 lawsuit progressed, Wells Fargo started to require that at least one woman or a person of color needed to be interviewed for all open jobs paying over $100,000 a year. This was similar to the Rooney rule in the NFL, which required the league to interview at least one non-white employee for senior positions. Earlier this year, the NFL was sued by Black coaches who claim they were subjected to sham interviews as a result of this rule.
Current and former Wells Fargo executives have spoken out on the problems with this requirement. Many have stated that they would have to interview a diverse employee for a position that was already filled just to meet this requirement. Another executive said he was told that if an advisor he was recruiting wanted to bring over a sales assistant, that was allowed, but he needed to post the job publicly. He would then need to reach out to his network to try and find diverse candidates, so there would be documentation that they tried to hire from a diverse pool of candidates.
Since the fake interviews were exposed, Wells Fargo hit pause on their policy and released a statement saying they were reevaluating with a plan to resume in July 2022.
While these initiatives were created with good intentions, they lacked direction and the resources to support them. This ends with developing policies and plans that make diversity efforts look good on paper but don’t change the culture. Wells Fargo needs to take a good look at what they are doing and make a real change once and for all.