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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."
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."
The funny thing is that their "Reestablished 2018" AKA the "Please don't leave, we're not going to open dummy accounts in your name anymore! Promise!" campaign probably did more to remind users of their past issues than it did to improve customer relations.
On the other hand, offering me $200 to open a new credit account works wonders. If they want to win back my business, they need more promotions like that one.
As a WF technology employee, that's too bad. The reality is that most of the scandals come from one of two places:
1. Happened at other companies before WF merged/acquired them. WF just got stuck with the results later on. That covers most of the mortgage/auto loan related stuff.
2. Happened in the retail sales side of the business because of poorly designed incentives. The upper executives there (and others) got fired and the CEO ultimately resigned. All the incentives are different now and the entire company (99% of which weren't involved in anything shady) has had round after round of additional ethics training to the point we can all quote it by heart.
Most of WF is not retail focused and the technology teams have nothing to do with any of the scandals.
The main thing left is that the regulators are limiting how much WF can grow and the media is so anti-WF now that anything which happens becomes national news.