Wells Fargo CEO apologizes for ‘insensitive’ comments about lack of Black talent

September 23, 2020.

In the wake of public outcry, CEO Charlie Scharf apologized Wednesday for saying earlier this year that there aren’t enough “qualified” Black and other candidates of color for the bank to hire.

The top executive of the San Francisco-based bank issued a formal statement following media reports about a Zoom meeting this summer during which he claimed that the bank had been slow to meet its diversity goals due to “a very limited pool of Black talent to recruit from.” 

Reuters reported Tuesday that some Black employees were irked by the CEO’s comments, believing that management was simply not looking hard enough.

Scharf reiterated his comments in a companywide memo in June announcing new diversity initiatives after the killing of George Floyd, an unarmed Black man, by police in Minneapolis in late May.

“I apologize for making an insensitive comment reflecting my own unconscious bias,” Scharf said in his statement Wednesday. “There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry and I never meant to imply otherwise.”

Reactions to Scharf’s comments were swift and fierce in the aftermath of the revelation, with several civil rights groups and corporate watchdogs drawing attention to the bank’s past failures to end discrimination against job applicants as well as borrowers.

“I know many highly talented Black lawyers who would have advised you against making such a statement given your settlement just months ago of a hiring race discrimination claim,” said Sherrilyn Ifill, president and director-counsel of the National Association for the Advancement of Colored People Legal Defense Fund, in a tweet.

In late August, Wells Fargo agreed to pay back wages and interest to settle allegations that the bank discriminated against more than 34,000 Black applicants for banking, customer sales and service and administrative support jobs. 

According to the U.S. Department of Labor, the bank also allegedly discriminated against 308 female applicants for administrative support roles. 

Ifill also alluded to the bank’s “history of race discrimination in lending,” citing the bank’s $10 million settlement with the city of Philadelphia over allegations that it discriminated against minority borrowers. The deal settled a 2017 lawsuit that alleged Wells Fargo violated the Fair Housing Act by pushing Black and Latino borrowers to take on riskier and more expensive debt than white borrowers.  

In his statement, Scharf acknowledged that Wells Fargo and the rest of Wall Street have “not done enough” to improve the diversity of new hires, especially at the top. 

“There is no question Wells Fargo has to make meaningful progress to increase diverse representation,” Scharf said. “As I said in June, I have committed that this time must be different.”

Scharf noted that the bank has hired two new Black executives in recent months and is “close to hiring” a new head of its diverse segments, representation and inclusion group. In his controversial memo, Scharf had also revealed that the bank would tie executive pay to diversity targets.

Earlier this month, the U.S. Federal Reserve said that banks are not providing enough transparency on specific actions they’ve taken to eliminate racial and gender biases in the workplace.

In its report to Congress, the Fed found that Black employees of U.S. banks comprise a larger portion of mid-level managers than their white colleagues — 49.44% Black versus 41.58% white. But at the executive level, Black employees make up just 8.99% of senior officers, compared to 77.35% who are white.

The backlash against Scharf is but one in a line of troubles for Wells Fargo, which still remains capped at $1.95 trillion in assets, per instructions from the Fed, which imposed growth instructions after bank employees opened millions of fraudulent accounts. 

The bank earned a negative outlook from Moody’s in early September due to its slower-than-expected pace of resolving its “myriad” of compliance and risk-management issues. The ratings agency estimated that Wells Fargo had lost roughly $4 billion in profits since the asset cap was implemented in 2018.

Warren Buffett’s Berkshire Hathaway began shedding its shares in a number of U.S. banks including Wells Fargo last month, having sold more than 100 million shares in Wells Fargo by early September

-- Additional reporting by Patrick Hoff, Theo Wayt, Minyoung Park and Carrie Wood