Wells Fargo Invests in Six Black-Owned Banks in Celebration of Black History Month

Wells Fargo & Co has invested in six Black-owned banks as part of its $50 million pledge program to support minority-focused lenders.

The banking giant will assign specific teams to provide the lenders with financial, product, or technical expertise, according to Wells Fargo in a statement on Monday. However, Wells Fargo declined to state how much each bank would get.

The recipient-lenders are Carver Federal Savings Bank, Commonwealth National Bank, Optus Bank, Broadway Federal Bank, M&F Bank, Citizens Savings Bank & Trust.

“It’s not just: ‘OK, here’s our money, call us if you have a question,’” said Bill Daley, vice chairman of public affairs at Wells and Fargo. “We’ve taken our time to try to understand these institutions.”

Due to the much background work done on the lenders, Wells Fargo can provide useful assistance depending on their needs. The areas include digital transformation, branch access and loan origination.

“These institutions, many of which have been around for over 100 years, are really vital to these communities, and if we’re going to begin to address the inequity that’s in many of our communities these institutions need to be healthier and need to be able to grow, to be more competitive,” Daley said.

Over the last two decades, the number of Black-owned banks has drastically dropped to 18 from 48. The combined assets of Black-owned banks has also declined since the last financial crisis of 2008, according to data from the Federal Deposit Insurance Corp.

Bigger banks like Bank of America, Morgan Stanley, Citigroup, and many others have also pledged to invest millions of dollars in Black-owned banks.

“Such investments can help Black banks upgrade their technological infrastructure,” said Eldar Beiseitov, a business economist at the Federal Reserve Bank of St. Louis, in a Thursday report. “The pandemic will increase the shares of nonperforming real estate and small-business loans, so increasing funding sources and capital will become critical especially for MDIs.”

Late last year, Charlie Scharf, the chief executive officer of Wells Fargo hired Kebler Santos to lead the bank’s diversity efforts to “drive meaningful change throughout the organization and better serve our diverse customer base and underserved communities.”

Scharf, however, came under fire for inappropriate comments about a limitation in the talent pool in finding Black executives.

Wells Fargo diversity leader Santos said the bank chose to announce its investment in February since it is Black History Month. Adding that communities of color have been greatly impacted by the coronavirus pandemic and through its equity investment scheme, Wells Fargo will be able to assist these communities.

“February is Black History Month, and we are proud to announce these investments at this time because they reflect our dedication to helping African American communities, many of which continue to fight the destructive economic impact of the pandemic,” Santos said.

Treasury Secretary Janet Yellen commended the moves taken by bigger financial institutions to support Community Development Financial Institutions and Minority Deposit Institutions. Any attempt at helping such institutions, by extension, would be helping minority communities. This would give people the right access to loans to “buy homes and start businesses.”