Wells Fargo has had an array of problems dating back to its mortgage scandal nearly a decade ago, In 2016, the bank agreed to pay $1.2 billion to settle charges that it had certified that loans were eligible for FHA Mortgage Insurance when they were not, and the bank did not disclose thousands of faulty mortgage loans to HUD
Basically, the bank had been creating fake accounts in the names of some of its customers. This happened because Wells Fargo (WFC) -) workers felt pressure to meet unrealistic sales goals. The FHA/HUD part was only a piece of the problem, but the bank paid and admitted that it has done wrong.
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"The revelation that the bank had been creating fake accounts in the names of its customers without their knowledge or consent was a major blow to its reputation for honesty and integrity," wrote the LearnSignal blog. "In the aftermath of the scandal, Wells Fargo faced significant backlash from customers and the public. Many customers closed their accounts and moved their business to other banks, and the company’s reputation among investors was also severely damaged."
You would think that a fine like that and the underlying customer issues would keep the company out of trouble for the next few decades, but Wells Fargo seems to stumble from scandal to scandal. Now, a group of its own employees have raised troubling new allegations.
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Wells Fargo Accused of Racial Bias
A group of current and former Wells Fargo employees has come forward with charges that the bank discriminated against bilingual Hispanic mortgage sales team members and Hispanic customers in a predatory lending scheme,
"The bilingual consultants were directed to steer Spanish-speaking customers away from home equity lines of credit into costlier and more profitable refinancing options without any associated disclosures, according to the complaint," Banking Dive reported.
Essentially, these customers were steered toward more expensive products, according to the allegations, which were first reported by Bloomberg. The loans the Latino customers were pushed toward came with higher fees and closing costs, which the lending agents were instructed to not mention.
In addition, the lending agents were not able to give their customers loan materials printed in Spanish. The complaint is part of a class action lawsuit and the plaintiffs have not asked for a specific amount of money to resolve the issue,
Wells Fargo Has a Troubling History
In addition to its fake account scandal, Wells Fargo paid a $3.7 billion fine in 2022 for mismanaging loans.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” said CFPB Director Rohit Chopra at the time. “The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender.”
The bank tried to apologize at the time.
“As we have said before, we and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide customer remediation where warranted," said CEO Charlie Scharf. "This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us.”
Scharf remains the CEO of Wells Fargo.
In a statement to TheStreet, the company said, "We believe the claims in this lawsuit misrepresent the conversations our home mortgage consultants are having with our customers to best meet their mortgage needs.
"Higher costs related to cash-out conforming refinances compared with rate-term refinances are tied primarily to pricing driven by the Government Sponsored Enterprises, which we don’t control. We look forward to presenting the facts of this situation, which reflect Wells Fargo's significant and long-term commitment to diversity, equity, and inclusion."
