• Key insight: A federal regulator is using the Fair Housing Act to target a lender's minority lending initiative. 
• Expert Quote: "Wells Fargo and all of its employees that engaged in race-based decision-making should be ashamed of themselves." — Scott Turner, Department of Housing and Urban Development Secretary 
• Supporting data: The Trump administration banned special purpose credit programs last year. Overview bullets generated by AI with editorial review.

The Trump administration is investigating Wells Fargo over its past efforts to improve the Black homeownership rate, in a new attack on Biden-era diversity initiatives.

Department of Housing and Urban Development Secretary Scott Turner chastised Wells for dividing Americans based on race, in a statement Wednesday regarding the probe. It's another blow to the bank which was also hit with lawsuits in recent years over its alleged discrimination toward Black consumers. 

"Wells Fargo and all of its employees that engaged in race-based decision-making should be ashamed of themselves," said Turner in a statement. 

In a letter to Wells Fargo CEO Charlie Scharf Wednesday, a HUD senior official said the regulator would investigate the bank's mortgage lending practices to aid minority homeowners. Wells previously committed $150 million to lower mortgage rates and reduce refinance costs for eligible black homeowners, to address historical gaps in racial homeownership rates. 

"The program was more aggressive than "usual lending programs" by putting shareholders' "money to work refinancing minority families' homes," wrote Craig W. Trainor, the assistant secretary for Fair Housing and Equal Opportunity at HUD. 

The letter didn't explicitly accuse Wells of discriminating against white homeowners, but Trainor emphasized the company's potential violations of the Fair Housing Act, a Civil Rights Act law prohibiting discrimination based on factors including race. 

HUD also seized on Wells Fargo's marketing, in which it previously declared in a press release that its diversity efforts exceeded those of "the next three largest bank lenders combined."

A spokesperson for Wells declined to comment. 

DEI under fire

The letter invoked special purpose credit programs, which the Trump administration quickly banned last year. Secretary Turner has also been a staunch opponent of DEI since taking the helm at HUD, both in the government and in the housing market.

Wells Fargo has been subject to numerous claims in recent years, including recurring accusations that it discriminates against minorities. That includes a major lawsuit, which originated in 2022, that scrutinized the company's underwriting technology in wrongfully denying or saddling Asian, Black and Hispanic borrowers with higher rates. 

A federal judge halted that case last summer, denying class certification for potentially over 100,000 members. That litigation followed a 2022 Bloomberg report that found the bank had the largest lending disparity between whites and minorities during the refinance boom earlier this decade.