Wells Fargo stock slipped as federal housing officials announced a probe into its mortgage programs aimed at boosting black and minority homeownership — with Housing Secretary Scott Turner blasting the bank’s race-based approach as “immoral” and “un-American.”
The investigation from the Department of Housing and Urban Development, which put Wells Fargo CEO Charlie Scharf on notice in a Wednesday letter — marked the latest Trump administration effort to crack down on DEI programs and similar efforts.
“Even if Wells Fargo did not violate the law, its practice of dividing Americans based on race is immoral, unethical and un-American,” Turner said in a statement.
“Wells Fargo and all of its employees that engaged in race-based decision-making should be ashamed of themselves.”
News of the probe, first reported by the Wall Street Journal, sent the bank’s shares sliding about 2% to $80 in afternoon trading.
The examination comes four years after Wells Fargo unveiled a $210 million push aimed at narrowing racial gaps in homeownership, including a Special Purpose Credit Program tied to mortgage refinancing.
Wells said in 2022 that the effort would begin by locating black borrowers in its servicing portfolio who might qualify for refinancing assistance.
It set aside $150 million for reduced rates and other refinancing costs, along with $60 million in grants intended to support homeowners of color.
The Biden-era policy came in the wake of a Bloomberg report finding Wells turned down half of all refinancing applications by black families in 2020.
Back in 2017, the bank committed to providing $60 billion in mortgages intended to help create at least 250,000 African-American homeowners by 2027.
But recent years have seen the feds’ stance on race-conscious lending shift dramatically.
HUD said in 2021 that Special Purpose Credit Programs complying with federal lending requirements generally did not violate the Fair Housing Act. A year later, it joined seven other agencies in encouraging creditors to explore them.
That position changed earlier this year.
A Consumer Financial Protection Bureau rule effective July 21 prohibits for-profit Special Purpose Credit Programs from using race, color, national origin or sex as an eligibility criterion.
HUD and six other agencies withdrew the earlier federal guidance the following month.
The policy reversal could complicate scrutiny of initiatives created under the previous framework, particularly if Wells contends that its actions were based on the government’s earlier guidance.
It was not immediately clear whether the HUD probe has advanced to a formal Fair Housing Act complaint.
The agency is looking at comparable efforts by other banks, potentially broadening the issue beyond Wells Fargo and forcing lenders to reassess programs that explicitly incorporate race into mortgage eligibility or pricing.
“The Fair Housing Act forbids racial discrimination in housing. It does not say: discriminate, so long as the discrimination is called a ‘special purpose credit program’ and justified as advancing ‘racial equity in homeownership,’” Assistant Secretary for Fair Housing and Equal Opportunity Craig Trainor said in a statement.
“No matter an institution’s size, wealth, or power, if there is reasonable cause to believe it has violated Americans’ civil rights, the Trump Administration will hold it to account.”
The Post has sought comment from HUD. A Wells Fargo spokesperson declined to comment.
