Senators pressure Wells Fargo for data and algorithms processing refinance applicants
The news: Wells Fargo’s refinancing practices are being scrutinized by several US senators following a Bloomberg investigation who found the bank only approved 47% of black homeowners’ mortgage refinance applications in 2020.
- Sen. Sherrod Brown (D-Ohio), who chairs the committee that oversees the bank, and several of his fellow Democrats jointly issued a letter requesting an investigation into the bank’s refinancing practices. The letter was addressed to the heads of the Consumer Financial Protection Bureau (CFPB) and the Department of Housing and Urban Development (HUD).
- Senses. Elizabeth Warren (D-Massachusetts) and Ron Wyden (D-Oregon) sent a letter to Wells Fargo CEO Charlie Scharf asking him to share, no later than March 28, 2022, the algorithms and data used for reviewing refinancing applications.
Wells Fargo Approval Rate for Black Candidates was significantly lower than its 72% approval for white candidatesaccording to Bloomberg, which reported that the bank had the lowest rate for black applicants among major lenders.
The banking giant denied any wrongdoing to Bloomberg and pointed to a 2020 internal review that found “other factors such as credit ratings” explained the shortcomings. Wells Fargo declined to share 2021 refinancing information with Bloomberg.
The big takeaway: The attention of senators can raise more questions whether new technologies promote discrimination.
- The CFPB is already examine whether unchecked AI practices in banking are harmful.
- A similar opinion is happening among watchdogs in the UK.
Wells Fargo is also facing another potential reputational blow, following others over the past decade such as: