New Orleans      Wells Fargo is in the news yet again and not in a good way.  This shoe, now dropping hard, is not about them lying about new accounts, their boiler room operations, or any number of headlines over recent years that have forced resignations of their top executives.  This time, it’s just plain and simple racial discrimination.

            Bloomberg looked at the data and found that Wells Fargo rejected 47% of the Black applicants for loans refinances.   When looking at all other lenders, 71% of the applicants for refi’s were approved.  If you were a white applicant then Wells said OK to 72% compared to other banks at 87%.  On one level from the CRA and HMDA data it’s clear that all lenders still have a lot of work to do, even 45 years after the passage of these acts barring such discrimination.  Wells Fargo is not only one of the biggest lenders, but from the numbers it’s clear that they are also one of the worst.

            That’s not even the whole story, just to be clear.  27% of the Black Wells applicants withdrew their application before the finish line.  Taking that number into account, Wells only approved refi’s for about one-third of the Black families that tried to get the job done with them.

            Wells Fargo had no comment on any of this.  If, and when, they ever do say something, my money is betting that they blame an algorithm.  That kind of blame shifting is the modern equivalent of saying, “hey, it’s fate” or maybe more appropriately, “the devil made me do it!”  What’s amazing to me is that such a disclaimer is such a thin veiled attempt to not take any responsibility for the fact that an algorithm is just computer math sorting a lot of numbers.  It’s Wells and their employees who have their fingers on the computer keys inputting the data and more importantly deciding how much weight to give the various factors.

            When banks, like Wells, begin the finger pointing, after they pull down the algorithm curtain, they usually say a denial has to do with debt-to-income ratio or loan-to-value ratio, plus the applicants’ credit score.  An interesting outfit called The Mark Up crunched the numbers of those two ratios for all of the banks covered under the Federal Reserve’s supervision of these acts.  They didn’t find much difference in the level of discrimination by banks when they ran the numbers without these ratios.  Of course, no one supposedly has access to individual credit scores except the individual and about every tom, dick and harry company that makes you give them a peek.

            We’ll have to keep an eye on all of these banks, but Wells Fargo is too big, and its discriminatory practices have too large an impact, for it not to fix this ASAP.  Finally!  How about the CEO and a couple of others showing some real accountability for racism, too?