Wells Fargo is facing another controversy, with former Wells Fargo employees alleging the bank conducted fake interviews for posts that were already filled.
Joe Bruno, a former executive in Wells Fargo’s wealth management division in Jacksonville, told The New York Times that he was fired from the bank after he told his seniors that “fake interviews” were “inappropriate, morally wrong, ethically wrong.” The newspaper reports that seven current and former Wells Fargo employees were asked by their superiors to interview candidates with “diverse” backgrounds despite knowing they didn't stand a chance of winning the position they were applying for.
Wells Fargo has been accused of racial discrimination in the past
This isn't the first time Wells Fargo has been accused of racial discrimination. In 2017, Wells Fargo Advisors, its brokerage arm, agreed to pay $35.5 million to settle a lawsuit launched by a group of African-American financial advisers who alleged racial discrimination.
Also, in Aug. 2020, the bank agreed to pay $7.8 million to settle allegations of hiring discrimination. At that point, Office of Federal Contract Compliance Programs regional director Melissa Speer, said, “Together, the Department and Wells Fargo will ensure the bank will proactively take steps to comply with federal hiring and equal employment opportunity laws.”
Wells Fargo CEO Charlie Scharf on the scarcity of Black talent
In an internal memo and Zoom meeting in 2020, Wells Fargo CEO Charlie Scharf said there was a shortage of Black talent. Whereas Scharf later apologized for the comments, he lamented that the financial services industry hasn't done much to improve diversity, particularly at the senior leadership levels. He emphasized that “there is no question Wells Fargo has to make meaningful progress to increase diverse representation.”
He outlined the various measures the bank is taking, such as hiring diverse candidates, offering anti-racism training courses, and linking executive compensation to diversity.
Wells Fargo was accused of discriminating against Black borrowers
Allegations of racial discrimination against Wells Fargo aren't limited to its workplace—it's also facing a lawsuit for discriminating against Black mortgage borrowers. In addition to accepting fewer applications from Black borrowers, the bank's average interest rates were higher for them than for white applicants. In 2012, Wells Fargo settled a lawsuit alleging racial discrimination in its lending practices, paying more than $175 million to the Justice Department.
Wells Fargo's stock forecast
Even with recession fears taking a toll on Wells Fargo stock, it has outperformed many U.S. stocks over the last two years. And although the bank's layoffs in its mortgage division have taken a toll on the business, many analysts believe that it's positioned to benefit from rising interest rates boosting its net interest margins.
Warren Buffett has finally exited Wells Fargo stock
Berkshire Hathaway, once Wells Fargo's largest stockholder (with a near-10 -percent stake), has fully exited its position. Warren Buffett sold the stock gradually and exited the bank in the first quarter of 2022. The conglomerate has exited JPMorgan Chase and Goldman Sachs as well.
However, it has added more Bank of America stock to its already large position, and in the first quarter of 2022, Berkshire Hathaway took a new position in Citigroup, whose stock has lagged behind peers for the last several years.