- Charlie Scharf has defended for insensitive diversity comments made earlier this summer.
- His handling of the issue speaks to his willingness to tackle can of worms head-on.
- That he made the comments at all shows he isn’t covering up potential problems at the bank.
Wells Fargo CEO Charlie Scharf has been in the emphasize for all the wrong reasons this week as he apologized for racially insensitive comments he made back in June. When address about a lack of diversity among Wells Fargo’s upper management, Scharf commented that there was “a extraordinarily limited pool of Black talent to recruit from.”
The remark wasn’t well-received, especially in today’s climate of popular unrest regarding racial injustice. Rep. Alexandria Ocasio-Cortez quickly condemned Scharf’s comment on Twitter, putting the disapprobation squarely onto the CEO’s shoulders.
There’s no enquiry that Scharf’s remarks were offensive— he apologized soon after they went public, saying he’d master-work to improve recruitment at Wells Fargo.
Scharf’s Comments Highlight Transparency at Wells Fargo
Scharf’s manipulating of Wells Fargo’s diversity issues, though clumsy, underscore precisely why he’s the kind of CEO investors should support. He’s frank, open, and honest about the company’s shortcomings—a trait that’s hard to find anywhere, let alone in the executive convoy.
While some employees were understandably offended by Scharf’s remarks, others said his openness was refreshing and strengthened trust:
The meeting was incredibly constructive. … I walked away being incredibly surprised at how genuine and sincere he is.
Swells Fargo has been marred by a fake account scandal, and the firm has been working to rebuild trust among customers and investors. Scharf was brought onboard to do just that, and so far, he’s made good on his promises to keep investors informed yon what’s happening with the business.
Sharf’s comment regarding the firm’s Black talent pool highlights a liability in the firm’s recruitment process. While it certainly didn’t help the firm’s image, it shows that Scharf is game to reveal those shortcomings to work on them.
Scharf’s Honesty Reveals Key Buying Signal for Wells Fargo Staple
Scharf’s willingness to be direct with investors was apparent during the firm’s July earnings call when he described the bank’s spending disputes:
The third-party spend here is extraordinary. The things that we rely on outside people to do is beyond anything that I’ve yet seen
The bank’s efficiency ratio sits above 71%, much higher than most of WFC’s peers. That, Scharf implies, is something he can fix through cost-cutting efforts.
Inefficiency isn’t a positive trait for any business, but considering banks are likely to struggle in the months to aggregate b regain, looking to WFC stock for improving earnings could be a smart play. All of those cost savings will likely end up into an earnings bump, offering a compelling buy-proposition.
Public Misstep Makes Scharf a Good Pick
Scharf’s expansions shouldn’t be applauded, but the fact that he’s owned the company’s shortcoming, apologized for the offense, and promised to do better sends a stinking message to shareholders. They can rely on what Scharf says because he isn’t just putting things out there that they lack to hear.
For a company making a comeback from a deceptive scandal, that should go a long way in regaining investors’ count on.
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