Dive Brief:

• Federal prosecutors are investigating whether Wells Fargo violated federal laws by conducting sham job interviews in an effort to meet diversity goals, The New York Times reported Thursday, citing two sources familiar with the matter.
• The federal investigation into Wells Fargo is in its early stages, and no charging decisions have been made, a source briefed on the investigation told ABC News on Thursday.
• In a statement provided to Banking Dive, the bank did not directly address the reported federal investigation, but said, “No one should be put through an interview without a real chance of receiving an offer, period.”

Dive Insight:

The investigation, which the Times reported is being conducted by the Manhattan U.S. attorney’s newly created civil rights unit, was sparked after a dozen current and former employees told the publication last month the bank was interviewing nonwhite and female candidates for jobs that had already been filled.

Wells Fargo CEO Charlie Scharf announced in June 2020 that the bank would aim to double Black leadership by 2025 and tie operating committee members’ diversity efforts to their pay.

The bank’s “diverse slate” policy, launched that year, requires at least half the candidates interviewed for open positions paying $100,000 or more per year be women, nonwhite or otherwise disadvantaged.

Wells Fargo temporarily has halted that policy, CEO Charlie Scharf announced in a letter to employees Monday. But the bank defended it this week in its statement to Banking Dive.

“The diverse slate guidelines we put in place are meant to increase diverse representation across the company and we can see meaningful results in our hiring data since 2020,” the bank said.

Roughly 42.3% of the bank’s hires in 2021 in jobs paying $100,000 or more were racially or ethnically diverse, compared with 36.9% in 2019, Kleber Santos, Wells Fargo’s head of diverse segments, representation and inclusion, told Business Insider last week.

Scharf said the bank will relaunch its diverse slate policy in July, after a pause of several weeks, so leaders can “review our guidelines and processes” and, after the review is complete, “make adjustments … where appropriate.”

Reports of questionable internal practices at Wells Fargo, which is still operating under an asset cap stemming from its 2016 fake-accounts scandal, continue to cast the financial institution in an unfavorable light. 

In recent months, the bank’s list of transgressions has grown to include reports of racial disparities in its mortgage lending, anti-money laundering violations and home-lending layoffs.

Sen. Sherrod Brown, D-OH, in a letter to Scharf last week, called out the bank’s “laundry list of consumer abuses,” and urged the CEO to “once and for all address Wells Fargo’s governance, risk management, and hiring practices — weaknesses that have plagued the bank for almost a decade.”