Wells Fargo Has Some Nerve

In June, at the height of a reckoning over race and police killings in the U.S., Wells Fargo CEO Charles Scharf tried to blame his bank’s failure to hire and promote Black people on Black people themselves.

“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 said in a memo to employees this summer, uncovered by Reuters on Tuesday. 

Scharf apologized the day after those comments came to light. “I apologize for making an insensitive comment reflecting my own unconscious bias,” he said in a statement Wednesday outlining the bank’s diversity strategy. 

But he should have known better, especially at Wells Fargo, where hiring “talent” doesn’t really seem like it was ever a priority. The bank has been poorly run by white people for more than a decade, and it has repeatedly been accused of racial discrimination in hiring and lending, paying out millions in claims. 

Statements like Scharf’s aren’t just false ― they’re pernicious. Companies often blame the “pipeline” for their own failures to hire people of color and perpetuate stereotypes about Black people, which makes it harder for people of color if they do end up getting hired.

“It’s such a lazy and quite frankly racist justification or excuse,” said Mehrsa Baradaran, a professor at the University of California, Irvine, who specializes in banking law.  

Not only is this so-called “pipeline” excuse a way to lay the blame for the bank’s failures on people of color; it also perpetuates the idea that the bank is some kind of perfect meritocracy in which white people just happen to be the most talented workers.

Wells Fargo CEO Charlie Scharf testifies before a House Financial Services Committee on Capitol Hill on March 10, 2020.

Wells Fargo CEO Charlie Scharf testifies before a House Financial Services Committee on Capitol Hill on March 10, 2020.

Wells Fargo has been charged with racial discrimination numerous times. Just this August, the bank paid $7.8 million over claims that it had discriminated against 34,193 Black applicants in hiring. Last year, Wells Fargo agreed to pay $600,000 over more claims of race and sex discrimination against 2,300 female and minority candidates. In a statement, the bank said the settlement stemmed from a review of hiring data from “many years ago,” which revealed that African Americans were hired at lower rates for some positions. There were no findings of “intentional” discrimination, and the bank had since changed its hiring practices, the statement said.

Rule No. 1 when it comes to hiring a diverse slate of applicants: Don’t blatantly discriminate against them.  

(Like other large banks, Wells Fargo also has a history of discriminating against Black homebuyers. In 2012, the bank paid $175 million to settle claims that it had discriminated against Black and Latino borrowers during the run-up to the housing crash in 2008. This was the second-largest settlement with the Justice Department of its kind at the time.)

But there is plenty more that largely white institutions like Wells Fargo can do to hire and retain Black workers beyond the basic goal of not discriminating against them. Bankers like Scharf need to rid themselves of the idea that they’re running meritocracies and bringing in top talent that just happens to be mostly white men. 

The idea that Wells Fargo is seeking the best talent and is a meritocracy is a joke. Pay attention to this company and their culture for the last decade. There’s a corrupt culture there.
Mehrsa Baradaran, professor at the University of California, Irvine

The insinuation that Wells Fargo only hires the best is dubious, considering the company’s many missteps. In just the past few years, the bank has admitted to mistakenly foreclosing on hundreds of families, illegally repossessing tens of thousands of cars, and fraudulently opening up accounts for people without asking, Zach Carter noted in HuffPost last year.

“The bank has undertaken at least four separate marketing campaigns aimed at improving its dreadful corporate image, issuing official apology after official apology for its litany of abuses,” he wrote. 

Scharf is the fourth CEO Wells Fargo has hired since 2016 when it got mired in a fraud scandal. The bank has struggled to turn a profit as its competitors have thrived. Wells Fargo’s reputation has been so damaged in recent years that it had a hard time even finding a CEO to run the place. (All the top candidates were white men, by the way.)  

“The idea that Wells Fargo is seeking the best talent and is a meritocracy is a joke,” said Baradaran, who worked with top banks during the financial crisis at a major Wall Street law firm. “Pay attention to this company and their culture for the last decade. There’s a corrupt culture there,” she said.

Scharf got his start in banking in 1987 when a family connection helped get his resume in front of Jamie Dimon, who was running a finance company in Baltimore at the time and is now running JPMorgan Chase. That’s not merit; that’s part of a long tradition in banking and a lot of other industries in which if you know someone, you get the job. Typically, this happens within networks of older white people offering a hand-up to younger white people.

The connection has served Scharf his whole career; Dimon recommended him for the top job at Wells Fargo, which he took last year. Scharf is one among a number of men Dimon has mentored and brought up in the industry.

“If you dig down deep enough to any of these CEOs and the path that these bankers took, it is clearly not a meritocracy,” said Baradaran. “This is the most obvious thing. It is a bros’ club. It is very much not just about talent.”

Bank CEOs are not a diverse group: (L-R) Michael Corbat, chief executive officer of Citigroup Inc., Jamie Dimon, chief execut

Bank CEOs are not a diverse group: (L-R) Michael Corbat, chief executive officer of Citigroup Inc., Jamie Dimon, chief executive officer of JPMorgan Chase & Co., James Gorman, chief executive officer of Morgan Stanley, and Brian Moynihan, chief executive officer of Bank of America Corp., listen during a House Financial Services Committee hearing on April 10, 2019. Seven CEOs of the country’s largest banks were called to testify a decade after the global financial crisis.

In his apology Wednesday, Scharf acknowledged that his industry hasn’t done enough to improve diversity and pledged to make progress. 

“There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry and I never meant to imply otherwise,” he said in a statement. He listed several new hires and promotions.

He also noted a bunch of stuff the bank is doing or planning to do in order to improve its numbers: recruiting at more diverse schools, offering anti-racism trainings, holding leaders accountable and tying diversity goals to compensation. A spokesperson pointed HuffPost to an announcement with more detail, including a commitment to doubling Black leadership over the next five years and “education sessions” where employees can talk about racism.

Still, it’s not clear what the bank will really do to keep talented Black men and women from quitting once they get there.

“The experiences Black people have in organizations, macro and micro-aggressions, are contributing to them leaving,” said Evelyn Carter, who works with companies on diversity. “I’ve looked at hundreds of companies’ data. There are a larger number of Black folks at the junior level. They fall off. It’s not by accident.”

Carter, who is Black, says the everyday experience of working in an environment where you are made to feel uncomfortable is exhausting and discouraging.  

“When we walk into workplaces where we don’t see people who look like us, when people call into question every comment we make in a meeting and [then] someone else makes the comment and it’s adopted without question,” she said, “this makes Black talent wonder, is it worth it to stay here?”

Companies need to equip their managers to recognize this and equip HR departments, too. Too often, a Black worker will complain about a racist comment or mistreatment only to be told, oh, that person didn’t mean to offend. (Recall Scharf’s apology, quoted above, in which he says he didn’t mean any offense?)

“So often I talk to folks and they’re like, ‘I just need someone to believe me that a comment impacted me,’” she said.  

Carter was speaking on Wednesday afternoon, shortly after the news broke that police officers in Louisville, Kentucky, would not be charged with murder for killing Breonna Taylor, a Black woman, in her home.

Carter’s feelings were raw. She said she was grateful that she worked somewhere where her colleagues would understand and empathize with her pain in learning that justice would, again, not be served for Black people in the United States. Often, managers are oblivious to these events. 

“If someone isn’t aware that as a Black woman, I’m carrying grief based on what’s happening, and I show up on a call and I’m not bright and chipper, that will lead them to think differently about me,” Carter said.

“When managers and leaders are silent, it contributes to the idea that as a Black employee, I can’t work here,” she added. “That’s not a pipeline problem, it’s a culture problem.”