“While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of black talent to recruit from,” Charlie Scharf, CEO of Wells Fargo noted in a recent company memo to staff.
Speaking plainly, if it sounds like a duck and walks like a duck, it’s usually a duck. We, like many others, are tired of excuses. Despite repeated claims to the effect of, “we’re trying our hardest but we just can’t find talented black candidates” from corporate America, it’s abundantly clear that the issue isn’t a lack of black talent. The issue is a lack of will, a lack of effort, and a failure of execution on the part of business.
While Wells Fargo isn’t alone in this, it does stand out given that hiring black talent is only one of several measures of integrity the bank is failing on. Below are some highlights.
Preying on customers
Wells Fargo has a long history of systemic practices that have exploited its customers. Recent episodes include opening fraudulent accounts in customers' names, then dunning them with fees to juice sales commissions. The bank settled with the SEC to the tune of $3 billion to put the episode behind it. One wonders what the bank could have done had it used a similar sum to effect culture change and revamp its hiring practices.
Beyond that debacle, Wells Fargo’s actions have disproportionately and often directly impacted households of color. Case in point: a pending lawsuit brought by the city of Sacramento,1 alleges the bank steered black and Latino customers into loans with higher rates and worse terms than it gave white customers. The bank has previously settled such claims — including a similar one alleging violations of the Fair Housing Act brought by the city of Philadelphia — without admitting or denying wrongdoing.2
Given this legacy, it’s problematic that Charles Scharf, selected by the bank’s Board as the person to bring about the massive cultural change required for Wells to reverse course, could have such a glaring blind spot. That he revealed such ignorance after less than a year in the CEO role, is particularly unfortunate.
Discriminatory hiring practices
Wells Fargo has settled with the U.S. Labor Department at least twice over claims of discriminatory hiring practices towards black and Latino candidates.3 It has also settled a suit over discriminatory pay with a group of black brokers.
To listen to Wall Street, Silicon Valley, and others tell it, one would think finding talented black candidates was akin to a search for a pot of leprechaun’s gold at the end of the rainbow. The reality is those who claim there is a “pipeline issue” or that the problem stems from “inadequate education” are just making excuses. A study from the Center for American Progress of tech industry hiring practices gives the lie to those frequent assertions. In other research, the Center found that “Regardless of educational attainment by Black workers, they typically have a higher rate of unemployment than their white college-educated counterparts.”
Instead of making excuses, some basic due diligence in hiring, followed up by ensuring their company culture is welcoming to black employees, and that opportunities to advance are fairly distributed, would go a long way to racially diversifying businesses’ ranks.
Leading with intent
We believe leadership, whether around racial equity or other core values and business practices, starts at the highest level. The fact that independent RIAs such as ours have captured increasing market share over the 10 years from 2006 to 2016, is in part because the controversy and problematic practices of the large banks have only increased.
Are you truly committed to racial equity and wondering how you are currently being served by your advisor or broker? Take a look at our list of 7 Questions to Ask. The answers you get may help crystallize what’s most important to you and help ensure you find a firm whose values are a good fit with yours.
1. Source: CNN, “Wells Fargo accused of preying on black and Latino homebuyers in California,” https://money.cnn.com/2018/02/27/investing/wells-fargo-sacramento-lawsuit-discriminatory-lending/index.html, February 27, 2018.
2. Source: American Banker, “Wells Fargo, Philadelphia reach settlement in redlining lawsuit,” https://www.americanbanker.com/news/wells-fargo-philadelphia-reach-settlement-in-redlining-lawsuit, December 16, 2019.
3. Source: Bloomberg Law, “Wells Fargo to Pay $7.8 Million to Settle Hiring Bias Claims,” https://news.bloomberglaw.com/daily-labor-report/wells-fargo-to-pay-7-8-million-to-settle-hiring-bias-claims, August 24, 2020.
GRID 202 Partners is a holistic financial planning firm specializing in fee-based, comprehensive financial and investment planning for individuals, couples, businesses and institutions. We serve successful, ambitious professionals and business owners ready to take the next step in developing a budget, reducing debt and creating wealth for themselves and future generations.