- Several Wells Fargo employees reported “fake” interviews to meet diversity rules, per a news report.
- Wells Fargo’s Kleber Santos responded to the report and spoke about other diversity topics.
- He explained the bank’s stance on key issues and said CEO Charles Scharf is committed to diversity.
Diversity, equity, and inclusion is tough work. Even industry-defining companies like Google and Facebook have stumbled in this area. For all the high-profile controversies, Wells Fargo seems to be having an especially difficult time, according to recent news reports.
Wells Fargo rejected nearly half of all Black mortgage-refinancing applicants in 2020, Bloomberg reported this month. And separately, seven current and former employees said they were instructed to interview Black and female job applicants to meet goals on bringing in diverse candidates after the company was already prepared to hire another candidate, The New York Times reported last week.
In a post-George Floyd era, many employees, customers, and investors are holding companies accountable to their diversity promises made in 2020 and 2021. These calls come at a difficult time for the country: There have been multiple racially motivated mass shootings recently, stoking difficult conversations on extremism in America. At the same time, corporate leaders are grappling with rising backlash against “woke” capitalism.
Insider spoke with Kleber Santos, Wells Fargo’s head of diverse segments, representation, and inclusion, about the recent news reports and the work the bank is doing to improve diversity and inclusion in its workforce and the economy.
Addressing claims about denying more Black applicants than other banks
Bloomberg’s recent report found that Wells Fargo was the sole lender that rejected more Black applicants than it accepted. But Santos said the report “oversimplified” how the approval process works. The bank has to deny applicants who don’t meet certain criteria outlined by Fannie Mae and Freddie Mac, he said, not by rules it sets itself. Fannie Mae and Freddie Mac are federally backed mortgage companies created by Congress that are designed to foster homebuying and make it more affordable.
“I think that article, in some ways, oversimplified something. The mortgage market is mostly what we call ‘conforming.’ It’s Fannie and Freddie,” he said. “We don’t have proprietary credit-underwriting models. We follow the guidelines of the GSEs.”
A government-sponsored enterprise, or GSE, is a quasi-governmental, privately held agency established by Congress to help more people get credit in certain areas of the economy. Fannie Mae and Freddie Mac are GSEs.
“We don’t try to play any type of game to manage a certain approval rate. Therefore we take a lot more applicants — a lot more diverse applicants than other institutions — and that results in a lower approval rate,” he said.
A Bloomberg spokesperson said the news organization stood by its reporting.
Santos acknowledged that the
has long participated in damaging practices that marginalized Black Americans, but said he “vehemently” disagrees that that’s what’s going on in this instance. He suggested the bank is interested in speaking with industry leaders to change the current criteria for accepting mortgage applicants.
“We stand behind the practice of allowing more people to apply, because that creates a conversation. It creates feedback, an opportunity for dialogue around what else can we do together to eventually put families in homes,” Santos said.
In April, Wells Fargo created a special credit program of $150 million to help Black families that wouldn’t otherwise get approved by the government for mortgages or mortgage refinancing. The program essentially provides borrowers with assistance to reduce their mortgage rates. Wells Fargo helped more Black homeowners refinance their mortgages in 2020 than any other bank, according to a company statement.
Responding to allegations of fake interviews to meet diversity requirements
Wells Fargo is also dealing with the fallout from a New York Times report in which several current and former employees said that the bank conducted sham interviews to meet requirements for interviewing diverse job applicants. Essentially, the bank conducted fake interviews with Black and female candidates after another candidate had already been selected, the Times reported.
“We researched all the specific hiring-practice allegations the reporter shared prior to the story’s publication and we could not corroborate these allegations as factual,” Santos said. “If we believe that any manager has conducted an interview with a predetermined outcome in mind, we believe we should investigate and punish if we find wrongdoing.”
A New York Times spokesman responded to an inquiry from Insider, saying: “As is standard journalistic practice, we sought comment from Wells Fargo, and included it in the story. This comment did not refute our findings. The New York Times stands behind our May 19 article.”
Santos pointed out that the firm’s hiring diversity rule — having 50% of all interview candidates be from an underrepresented background — has worked to increase diversity at the company. In 2019, before the implementation of the rule, 36.9% of hires for people making $100,000 or more were racially or ethnically diverse — Black, Latino, Asian American Pacific Islander, Native American, or Alaska Native. By 2021, that rose to 42.3% of leaders, per Wells Fargo.
This isn’t the first time Wells Fargo has come under scrutiny for diversity, equity, and inclusion matters. Though he has since apologized, Wells Fargo CEO Charles Scharf blamed a lack of diversity at the firm on a lack of Black talent, in comments made in 2020.
“We’re committed to diversity, equity, and inclusion on all levels,” Santos said. “I experience Charlie as unbelievably supportive. I have 90 people in my organization, and he’s never asked me about my budget or to cap the number of initiatives when we present.”
Since George Floyd’s murder, Wells Fargo has pledged more than $450 million to support Black-owned banks, small businesses, and mortgage applicants. Thus far, it has deployed some $275 million of that $450 million.
“This work takes time,” Santos said. “It’s a marathon. It’s not a sprint.”