Wells Fargo promotes Fercho to lead its diversity and inclusion group

Wells Fargo has promoted its home lending head, Kristy Fercho, to lead the San Francisco bank's diversity and inclusion efforts. She will also sit on the operating committee of the bank.

Fercho, who's run the bank's home lending division since August 2020, is staying in her current position while Wells Fargo finds her replacement. But she's transitioning to her new role as head of Wells' diverse segments, representation and inclusion division, and she's joining the $1.9 trillion-asset bank's operating committee immediately. 

She will report to Wells Fargo CEO Charlie Scharf, who set up the division in 2020 and elevated the role to report to him. A company spokesperson said Fercho is the first Black woman executive to report directly to a Wells chief executive.

Scharf said Fercho's experience running business lines "puts her in a unique position to make our DE&I work even more central to how we operate as a company and to drive positive outcomes for our employees and communities." Before she joined Wells Fargo in 2020, Fercho was president of Flagstar Bank's mortgage division.

Fercho won the top spot on American Banker's Most Powerful Women to Watch list this year, and last year she became the first Black person to chair the Mortgage Bankers Association. Fercho has focused on closing the racial homeownership gap as MBA chair, including through getting its members to sign a "Home for All pledge" to boost minority homeownership and affordable rentals.

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Her promotion comes as the home lending division undergoes a series of changes. 

Like other mortgage lenders, Wells Fargo's division has laid off staff as demand for refinancing has sunk due to higher interest rates. The company is also looking to scale back its footprint in the U.S. mortgage market, with Scharf saying this year Wells is "not interested in being extraordinarily large in the mortgage business just for the sake" of it. 

Scharf has said Wells Fargo will make its existing customers its primary focus rather than being more proactive in finding new mortgage customers. Bloomberg News reported in August the pullback could include cutting back on servicing on other lenders' mortgages.

Fercho is replacing Kleber Santos, who became Wells Fargo's CEO of consumer lending in July and is overseeing the mortgage shift. 

Wells Fargo's home lending division has long faced scrutiny from regulators, with the Office of the Comptroller of the Currency fining the company $250 million last year for continued problems with customer remediation. 

Democratic lawmakers have also raised concerns over a Bloomberg News investigation that found Wells Fargo's refinancing approval rates for Black applicants were far lower than those of White applicants. The company has pushed back on the analysis, with Santos calling it "oversimplified." 

The company also faced criticism after The New York Times reported some managers set up "fake interviews" with nonwhite and female applicants to jobs that had already been set aside for someone else, an effort to try to meet internal diversity guidelines at the bank. 

After briefly pausing those guidelines and undertaking a review, Wells Fargo reinstated them in August and said it will continue to expect at least half of the interviewees for some positions to be diverse. The company, however, made several tweaks to the guidelines and is providing updated training for recruiters and managers. 

Wells Fargo has said the guidelines have helped the company see "measurable increases in diverse representation."

In a quarterly filing for investors Monday, Wells Fargo said the Department of Justice and Securities and Exchange Commission "have undertaken formal or informal inquiries or investigations regarding the Company's hiring practices related to diversity."