Wells Fargo prioritizes lending to minorities, cuts back on mortgages

Banking giant Wells Fargo announced they are planning on reducing the size and scope of its mortgage lending business for all Americans and instead focus on "minority communities."

According to the New York Post, Wells Fargo's Head of Home Lending and Head of Diverse Segments, Representation, and Inclusion at Wells Fargo, Kristy Fercho, said, "We will continue to expand our programs to reach more customers in underserved communities by leveraging our strong partnerships with the National Urban League, Unidos US, and other non-profit organizations." 

"We also will hire additional mortgage consultants in communities of color," Fercho added,

CEO of Consumer Lending, Kleber Santos, said in a press release, "We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus."

According to the Post, Wells Fargo's specific goal will be to "Expand its retail team by focusing on existing bank customers and underserved communities," "Invest an additional $100 million to 'advance racial equity in homeownership,'" and "Deploying additional Home Mortgage Consultants in local minority communities."

Wells Fargo will also allocate another $150 million to help "more black and Hispanic families achieve homeownership."

Wells Fargo's commitment to DEI follows other major banking institutions such as Bank of America, which started offering black and Hispanic Americans exclusive zero down payment and zero closing cost mortgages for first-time home buyers in September.

Wells Fargo's DEI mortgage initiative comes as the Federal Reserve has started raising rates to combat inflation and stave off a recession.

In 2008, America entered the Great Recession, which was caused in part by the subprime mortgage lending crisis. Sub-prime lending originated in the Clinton administration when, in 1995, his work on the Community Reinvestment Act pressured financial institutions to lend to low-income earners. Combined with a lack of oversight, especially former Democrat Congressman Barney Frank with Fannie Mae and Freddie Mac, contributed to the 2008 collapse of the housing market.

Wells Fargo was forced to pay $3 billion in 2016 in a scandal that revealed the bank had been opening fake accounts under customers' names without their consent to give the impression they were meeting unattained sales goals. 

Santos told CNBC, "We are acutely aware of Wells Fargo’s history since 2016 and the work we need to do to restore public confidence."

Earlier this week country music star John Rich, co-founder of the restaurant and bar the Redneck Riviera and the whiskey brand of the same name, along with Larry Elder and Ben Carson announced they had purchased the First State Bank of Elmore City, Oklahoma, renamed it Old Glory Bank, and launched it as a pro-America financial institution.