Wells Fargo faces probe over alleged discriminatory refinancing practices
Senate Democrats demand answers and additional information from the bank's CEO
Senate Banking Committee chairman Sherrod Brown and other lawmakers have urged regulators to investigate Wells Fargo’s alleged discriminatory mortgage practices during the pandemic. A Bloomberg report revealed that, among major lenders in the US, Wells Fargo had the lowest application-approval rate for Black homeowners in 2020. The bank approved only 47% of refi applications from Black applicants compared to 72% of those from White applicants.
In a letter addressed to Wells Fargo CEO Charles Scharf, US senators Elizabeth Warren and Ron Wyden demanded the bank provide data and additional information regarding its mortgage refinancing practices and its “potentially illegal discrimination against Black homeowners.” In particular, Wells Fargo was asked to produce all data and algorithms used to evaluate refinance applications from Jan. 1, 2010, to Dec. 31, 2021. The senators also requested the following information and records by March 28:
Any analyses conducted by Wells Fargo regarding the causes of its relatively low approval rates for Black homeowners seeking to refinance their mortgages and the results of these analyses;
Any actions or plans developed by Wells Fargo to redress its relatively low approval rates for Black homeowners seeking to refinance their mortgages;
All internal communications and all communications with state and federal regulators regarding Wells Fargo’s relatively low approval rates for Black homeowners seeking to refinance their mortgages.
A Wells Fargo spokesperson denied any wrongdoing in response to the letter, saying that the bank’s internal review of its 2020 lending decisions determined the discrepancy was due to other factors such as credit scores. Paul Turner, the Wells Fargo spokesman, told Bloomberg that they “will continue to work closely with our regulators and other stakeholders on our shared goal of decreasing the homeownership gap for Black and other diverse communities.”
The CFPB, on Wednesday, announced making changes to its supervisory operations. The bureau said it will scrutinize discriminatory conduct that violates fair lending laws and closely examine financial institutions’ decision-making in advertising, pricing, and other areas.
“When a person is denied access to a bank account because of their religion or race, this is unambiguously unfair,” CFPB director Rohit Chopra said in a statement. “We will be expanding our anti-discrimination efforts to combat discriminatory practices across the board in consumer finance.”