Wells Fargo's Scandals Finally Hurt Its Bottom Line (cnn.com)

An anonymous reader quotes CNN: Wells Fargo said operating losses surged 77% last quarter because of various problems in its auto lending, wealth management, mortgage and currency businesses. Overall expenses rose by 3%. Meanwhile, Wells Fargo said profit declined by 12% during the second quarter, missing Wall Street's expectations. The bank's stock, which has lagged behind the rest of the market, dropped 3% on Friday... Wells Fargo was also hurt by a $481 million income tax bill linked to a recent Supreme Court ruling that allows states to force online retailers to collect sales taxes...

Even though the economy is strong, several crucial metrics at Wells Fargo are shrinking. For instance, average deposits dropped by 2% to $1.3 trillion, led by a drop-off in business from financial institutions. Wells Fargo blamed the decline on actions it had to take due to penalties imposed by the Federal Reserve that prohibit the bank from growing its balance sheet. Lending, the primary way that banks make money, also dipped by 1% from the first quarter at Wells Fargo. It cited declines for commercial real estate and consumer loans, including auto lending. Mortgage banking profits also declined sharply.
If average deposits dropped by 2% to $1.3 trillion -- that looks like a drop of over $26 billion.

CNN reports that an analyst at CFRA Research has downgraded his rating on Wells Fargo -- to "sell."

Comments

It's all about that business model

[Q-Hack!]

If your business model is to screw the customer, then don't be surprised when your customers find different banks.

Finally...

[Anonymous Coward]

Some GOOD news for once. I wonâ(TM)t start actually celebrating until they start closing locations or their leadership start getting thrown in jail. THEN it will be time to throw a party.

Re:Finally...

[andymadigan]

Public image is everything for a bank like Wells Fargo. They allowed a cancer to grow in the most visible section of their business.

They had 3 options:
1. Close their retail business and pivot to working only with high-value clients, drastically reducing their public image.

2. Do everything they can to ensure that every single employee that opened an account fraudulently, and their managers, are prosecuted to the fullest extent. At minimum every single one of them should have received lifetime bans from the financial industry. Instead of just firing some executives, they should have acted as if Wells Fargo was a victim of these criminals, and done whatever they could prosecute and recover damages from the criminals (including turning evidence over to AGs). It's worth noting that WF also filed fraudulent U5 documents against former employees who objected or refused to participate in the fraud. The people who wrote and signed off on those documents should have likewise been terminated for cause, and the "new" WF should have helped those affected file defamation suits.

3. Clean out the executives, send everyone to "training", and wait for people to forget that they're basically still a criminal organization.

If WF is/was really 95% good with 5% of the employees being bad apples, they would have gone with option 2. Going with option 3 means that, as a corporation, they don't see that what they did was wrong.

Personally, I'm still hoping that Wells Fargo gets caught violating their deferred prosecution agreement (I guarantee you they're already violating it), and ends up getting dismantled by the courts.

Personally, I'm ignoring their want ads

[raymorris]

For months Wells Fargo has been trying to hire security professionals in my area. No thanks, I'm not interested in working in that environment. I certainly wouldn't be a customer either.

I don't think the scandals hurt them

[rsilvergun]

few know and fewer care. I think they had to stop their shenanigans for a while (they're being watched right now) and it's costing them money. Being good is not as profitable as being evil. That's why we need laws to force companies to be good.

Just like VW..

[rsborg]

you're going to have to convince me that this kind of behavior isn't widespread.

Instead of punishing a bank here and there, we should have sent executives to prison for the highway-robbery committed for the subprime scandals and general knavery of '03-'08.

Otherwise they'll just keep doing it and chalk any losses up as a cost of doing business. How much did they make over the years - was it more than they're suffering now? If so I'd say the bean-counters would call it a win and do it again.

WF's only problem is they got caught (like VW). The rest are busy increasing their bribes to the regulators.

I can't steal a pencil

[raymorris]

I don't know if they would expect me to be complicit in criminal acts, but it's clear their corporate culture doesn't have ethics as a top priority.

I'm kind of in an interesting situation. We provide security services to banks and other large businesses. When you see in the news that someone stole $x million from banks, or read about credit card skimmers or whatever, it's my *job* to know how the bad guys do that. In effect, it's my job to know how to steal millions.

One thing I've learned is that crooks don't normally get caught the first time. Or the second or third time. They keep doing it until they eventually get caught. So I've learned that to avoid getting caught, a criminal should do one big theft, once - at most two or three the same day, then stop. Don't keep stealing $12,000 at a time until you get caught. Someone or two big ones and retire.

So here I know *how* to commit crime electronically. I know better than to commit small crimes. So why haven't I stolen $10 million and retired? Only because I'm not a thief. For that reason, I have to make sure I never become a thief. Once, I accidentally took a 25 cent clove of garlic home from the grocery store without paying for it. I had to drive back to the store and pay the 25 cents, because I have to know I'm not a thief, I stick strictly to my moral principles (the best I can). If not, I'm all too likely to try stealing $10 million.