On Wednesday, Wells Fargo CEO Charles Scharf apologized for comments he made on diversity in the financial industry which suggested it is difficult to find qualified Black executives.
What We Know:
- In a memo written and distributed to employees in June, but publicly released last week, Scharf said, “while it might sound like an excuse, the unfortunate reality is that there is a very limited pool of black talent to recruit from” in corporate America. Reuters reported that Scharf made comments and similar statements in a Zoom meeting which led to an intense backlash in Washington and on social media.
Perhaps it’s the CEO of Wells Fargo who lacks the talent to recruit Black workers. https://t.co/CI7CRriU3i
— Alexandria Ocasio-Cortez (@AOC) September 23, 2020
- In a prepared statement on Wednesday, Scharf shared how his comments reflected his “own unconscious bias”. In the statement, he wrote, “there is no question Wells Fargo has to make meaningful progress to increase diverse representation”. The company has pledged to increase the hiring of minority candidates, particularly through recruiting from Black colleges and universities, as well as implementing new anti-racism training programs at the bank.
“There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry and I never meant to imply otherwise,” the statement said. “It’s clear to me that, across the industry, we have not done enough to improve diversity, especially at senior leadership levels. And there is no question Wells Fargo has to make meaningful progress to increase diverse representation.”
- Like much of the political and corporate world, the banking industry has faced increased pressure to address diversity, or lack thereof, in the industry following the death of George Floyd as well as the racial and economic inequality that Black and other minorities face. Banks have announced new changes to how they lend as well as the creation of new programs to help spur economic development in communities of color.
- The American banking industry is dominated by leadership that is largely white and male. None of the six big Wall Street banks have ever had a Black or female CEO. Two weeks ago Citigroup announced it would promote a woman to CEO next year, which would make them the first on Wall Street to do so. Banks of all sizes, big or small, are still regularly accused of discriminatory practices, including allegations of “redlining” Black homebuyers. Redlining is a practice where banks deny or avoid providing credit services to certain consumers because of racial demographics or the neighborhood where they live.
- About 13% of named executives at financial services companies are a racial or ethnic minority, according to Institutional Shareholder Services. The last prominent African American to serve as CEO at a large financial services company was Kenneth Chenault, the former CEO of American Express. Chenault retired in 2018 and called the lack of a pipeline to recruit and retain diverse talent “embarrassing” to the financial services industry.
Scharf has pledged over the next five years to double the number of Black leaders and tied executive compensation to reaching certain diversity goals. He has also said he has told hiring managers to consider diverse candidates for high-paying roles that are vacant and to ensure diversity on interview teams.
