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Wells Fargo is undergoing a major transformation under CEO Charlie Scharf. But controversies and layoffs continue to dog the bank.

Business Insider 1 day ago insider@insider.com (Business Insider)

Charlie Scharf, CEO of Wells Fargo Wells Fargo; Tom Williams/CQ-Roll Call, Inc via Getty Images; Samantha Lee/Insider

Wells Fargo has laid off some employees and fired others in its mortgage division.
It's also faced scrutiny over lending and hiring practices.
Here's the latest on what's happening at the bank, and how its CEO is changing its leadership ranks.

The road to victory has not been easy for Charlie Scharf.

Scharf, 57, was placed at the helm of Wells Fargo in 2019 to help the San Francisco bank navigate its way out of a series of consumer scandals. In that time, he's made some big moves, including overhauling the bank's leadership ranks and beefing up compliance. But controversy continues to haunt to the nation's third largest bank.

Despite Scharf's efforts, Wells Fargo was accused in June of conducting sham interviews with women and nonwhite candidates for jobs that had already been given to others. In March, Bloomberg said the bank had engaged in discriminate lending practices, which Wells Fargo denies. It also recently fired dozens of loan officers it had accused of improperly changing home valuations in its internal system to trigger appraisal waivers.

Rising interest rates are hurting mortage lenders and some stock trading platforms. Fintech companies like Robinhood and Better are reacting to the slowdown by cutting staff. Here's the list of financial technology company layoffs so far. America's tech industry enjoyed an unprecedented boom during the pandemic when Americans turned to their phones like never before to do everything from shopping to online banking. Financial technology startups that help consumers bank, trade or shop online were among the winners. But business is slowing as people increasingly return to their pre-pandemic lives.Compounding the slowdown for fintechs are rising interest rates, which hurt demand for services like mortgage lending and stock trading. Signs of distress are showing up in the form of layoffs, which have been popping up all over Silicon Valley businesses in the last few months, from no-fee trading app Robinhood to mortgae software provider Blend.Here are some of the most notable examples so far: Read the original article on Business Insider

Scharf was put in place specifically to help the bank move beyond a series of scandals that began with the 2016 regulatory fines over the opening of fake accounts. The fake account scandal led to a Federal Reserve asset cap that the bank is still subject to, limiting its growth, all while Scharf has pledged to cut $10 billion in costs from the bank's bottom line.

Here's a rundown of what's happened since Scharf took the helm, including layoffs and firings, hiring issues, and what the bank's leadership looks like now.

How Scharf is making changes

Scharf has dramatically overhauled the bank's leadershipsince he became CEO in 2019. Wells Fargo has brought in more than 90 top executives from outside the bank in that time.

Wells Fargo has also "drastically changed" how it operates its $2 trillion wealth management business, Scharf said at a recent industry conference. He said the goal behind some of the moves has been to provide more uniform services and products to investors to clients.

Scharf has also said he plans grow businesses that will put Wells in direct competition with banks like JPMorgan and Goldman Sachs, including credit cards and investment banking. At the same time, he wants to pare back on mortgage lending business, Scharf said in June.

Wells Fargo CEO Charlie Scharf says the bank is considering pulling back on parts of its mortgage business amid scrutiny over its lending practices

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Wells Fargo CEO Charlie Scharf has called the change in leadership at the bank a 'dramatic change.' Here's our exclusive look at the addition of nearly 90 senior hires.

Wells Fargo CEO Charlie Scharf on how the bank is revamping its $2 trillion wealth management arm

Mortgage layoffs, firings

Wells Fargo laid off home lending employees in at least five major markets in April as the Federal Reserve starting ticking interest rates higher. The bank had reported in April that its home revenues fell to $1.5 billion in the first quarter, down 33% over the same period a year earlier.

In May, Insider reported that Wells Fargo fired dozens of loan officers that it accused of misusing so-called appraisal waivers, which give borrowers and their loan officers the right to bypass a home appraisal on mortgages originated by lenders such as Wells Fargo and sold to Fannie Mae or Freddie Mac if the loan meets certain conditions.

The bank terminated the employees "after a robust investigation revealed they engaged in misconduct," a Wells Fargo spokesman told Insider. But some loan officers protested the terminations, telling Insider that some of the instances dated back to the first half of 2020 and that guidance from senior managers at the time was not clear.

Here's why high flying mortgage startups like Better and traditional lenders like Wells Fargo are laying off thousands of employees — and it may get way worse

Layoffs hit Wells Fargo's home lending unit as mortgage rates climb and originations plummet. Teams across multiple US cities may be affected.

Inside the Wells Fargo town hall that had a top exec telling staff 'I love each and every one of you' while explaining that home lending layoffs were inevitable

Scrutiny over lending practices, hiring

In March, a Bloomberg report revealed that Wells Fargo rejected more than half of Black homeowners' refinancing applications in 2020. A Wells Fargo spokesperson told Insider in June that it is "confident that our underwriting practices are consistently applied regardless of the customer's race or ethnicity."

The spokesperson added that Wells Fargo funded "twice as many loans overall" to Black borrowers in 2020 as the next largest bank, if loans originated and purchased from correspondent sellers were included.

Then in June, the New York Times reported that Wells Fargo had been conducting sham interviews with women and nonwhite candidates for jobs that had already been given to others, according to interviews with several current and former employees interviewed for the story. The employees did so ostensibly to meet diversity requirements on paper, the report said.

A Wells Fargo executive told Insider that the firm's hiring diversity rule — having 50% of all interview candidates be from an underrepresented background — has worked to increase diversity at the company.

Wells Fargo exec responds to reports that it denied mortgages to Black applicants and held sham job interviews

Read the original article on Business Insider

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