The iconic image of the Wells Fargo stagecoach has shifted to an image of controversy for the bank in recent years.
Wells Fargo CEO Causes Controversy with Comments About Black Talent Pool
Wells Fargo CEO Charlie Scharf has apologized for saying that the bank has “a very limited pool of Black talent to recruit from.”
Scharf later apologized in a memo, calling his statement “an insensitive comment reflecting my own unconscious bias.”
The CEO wrote, “There are many talented diverse individuals working at Wells Fargo (WFC) and throughout the financial services industry and I never meant to imply otherwise. It’s clear to me that, across the industry, we have not done enough to improve diversity, especially at senior leadership levels. And there is no question Wells Fargo has to make meaningful progress to increase diverse representation.”
Reuters initially reported Scharf’s comments from a June memo following Black Lives Matter protests in the wake of the death of George Floyd in Minneapolis.
Scharf actually first made the comments on a 90-minute Zoom call.
He then doubled down with the memo in June.
In that June memo, Scharf wrote, “We need more diverse representation on our operating committee.”
Scharf continued, “While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of Black talent to recruit from.”
He went on to say, “Our progress will not be a straight line given the experience required in some of our roles, but I would ask that you judge our progress two years into my tenure as CEO.”
Wells Fargo brought Scharf in a year ago to clean up some issues, particularly the fake account scandal that rocked the company from four years ago.
The bank reached a $3 billion settlement in February to settle the fake accounts scandal.
Despite his apology, Scharf has still faced criticism for his lack of Black talent remarks.
On Sept. 22, Rep. Alexandria Ocasio-Cortez (D-N.Y.) tweeted, “Perhaps it’s the CEO of Wells Fargo who lacks the talent to recruit Black workers.”
Shortly after the controversial comments, Well Fargo committed to doubling Black leadership over the next five years.
Wells Fargo also tied executive compensation to meeting its diversity efforts.
In a statement, Wells Fargo said, “Currently among the company’s senior leadership, 41% are female, and 21% are racially or ethnically diverse; 6% are Black/African American.
“The company will aggressively recruit senior managers from outside the company, which will in turn better position Wells Fargo to promote from within for its top leadership roles.”
While many found Scharf’s original comments offensive, some people present for the Zoom meeting did not take offense to the statement about a lack of Black talent.
However, some Wells Fargo employees off the record told Reuters that the comments by the CEO left them annoyed and uncomfortable.
Those employees did not want to go on the record out of fear of retribution.
The New York Daily News reported that some customers planned to leave the bank because of the controversial comments, while others said that the bank has a checkered past with people of color, anyway.
In 2012, Wells Fargo paid Black and Hispanic customers $175 million to settle accusations that the bank charged minorities higher rates on mortgages.
Ohio State Senator Nina Turner tweeted, “Seriously? There is no talent shortage in the Black community.”
In her tweet, Turner continued, “There is a serious lack of commitment & effort to recruit and maintain Black talent in space and places within corporate America. You take that Black $ with no problem. Let’s have the talk.”
Wells Fargo spokesperson Beth Richek defended Scharf’s record when it comes to diversity efforts.
She said that Scharf has disclosed more information about diversity efforts than other companies.
Richek said that Scharf “is committed to deep and systemic change to increase diversity and has held several forums where there has been candid conversation and unfiltered feedback.”
With Scharf as CEO, Wells Fargo added two Black executives to its operating committee.
Lester Owens serves as head of operations.
And Ather Williams currently serves as head of strategy, digital and innovation.
Teri McClure, a former executive at the United Parcel Service, Inc. said, “Anyone who’s open to re-evaluating their position, their perspective and taking into consideration a new set of facts, you have to give him the benefit. The Wells Fargo team should use that as an opportunity to move forward.”
Wells Fargo plans to boost diversity within the company by recruiting students and graduates from Historically Black Colleges and Universities (HBCUs).
Many banks have reevaluated their lending policies in a way to close the wealth gap in the wake of the killings of Floyd, Breonna Taylor and countless other unarmed Black people killed by police officers across the country.
On Sept. 24, The Associated Press reported, “On Wednesday, Citigroup announced that it would direct $1 billion of the firm’s capital toward closing the ‘racial wealth gap’ in the United States. It would include $550 million in homeownership programs for communities of color, and hundreds of millions toward Black-owned businesses and suppliers.
“American banking is dominated by leadership that is largely White and male. None of the six big Wall Street banks have ever had a Black or female CEO. Citigroup two weeks ago announced it would promote a woman to CEO next year, the first on Wall Street to do so. Banks large and small are still regularly cited for discriminatory practices, including allegations of ‘redlining’ Black homebuyers. Redlining is a practice in which banks deny or avoid providing credit services to consumers because of racial demographics or the neighborhood where they live.
“About 13 percent of named executives at financial services companies are a racial or ethnic minority, according to Institutional Shareholder Services.”