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.

Re:It's all about that business model

[Anonymous Coward]

Jews don't charge usury, as the Torah forbids it. Neither do Muslims. WF is not even Jewish. Typcial anti-Semitic behaviour.

Re:It's all about that business model

[KixWooder]

Wells is for Henry Wells and Fargo is for William Fargo.

Re:It's all about that business model

[greenwow]

Even after they've had accounts for decades! I opened my first account with them (well, a bank they bought-out) 47 years ago, but even I'm considering moving to a new bank. In the their branch a block from my office, they treat me like a king since I have a portfolio-level account (their highest level, used to be called Premier). They've even sent someone twice to my home on a Saturday to help with an issue. I get tons of free stuff including a large safe deposit box for work that they don't charge me for and also notarizing documents for work.

I'm almost frustrated enough with them to consider quitting them even with the free perks. They opened a MasterCard account without my permission, and I only found-out about it when bogus charges were sold to a collection agency in Olympia, WA. I only had an ATM card on purpose. That took almost a year to get fixed. They thought I would be happy with them since they hired a lawyer at their cost to help, but I would have rather them not issue a credit card without my permission in the first place.

Re:It's all about that business model

[nmb3000]

I opened my first account with them (well, a bank they bought-out) 47 years ago, but even I'm considering moving to a new bank.

Why do you say it like this -- as if you owe a corporation some kind of loyalty? This quirk of psychology ("I've been with X for so long, I need to stick with them") is something that companies know about and take advantage of.

You don't owe Wells Fargo anything at all. Trust me, they certainly won't do anything special for you. As they've proven repeatedly over the last couple of years, you're just an account number and someone to take advantage of. I would strongly suggest looking for a local credit union to bank with. You might be surprised with how good they can be, but at the very least they won't be any worse than Wells Fargo.

Re:It's all about that business model

[AJWM]

. I don't think their problems are malicious since around a third of the time it's not in their favor.

Which means two-thirds of the time it is in their favor.

A casino would love odds like that.

Re:It's all about that business model

[rtb61]

Well apparently the individual does, owes them comments and they Wells Fargo owes them money. How much do they have deposited with Wells Fargo, probably nothing, why would any smart business trust Wells Fargo after what they did. Public relations agencies are pretty smart, well, rampant liars and not worth much beyond being skilled manipulative liars.

Lesson of the story if the comment sounds like an ad then it probably is one.

Wells Fargo as corrupt as fuck and well, they only reason none of them was sent to jail for blatant mass fraud, they still have enough money to buy government and get them to pass the penalty onto Wells Fargo investors and of course absolutely not Wells Fargo executives, who even get to keep their bonuses generated by that fraud.

Re:It's all about that business model

[Anne Thwacks]

I would have rather them not issue a credit card without my permission in the first place.

I don't know who CFRA Research are, but if a bank does this, the rating ought to be shoot to kill.

This is clear proof they are unfit to be a bank.

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.

Re:Personally, I'm ignoring their want ads

[Ol Olsoc]

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.

Smart move - I suspect they would demand you commit criminal acts. Or at least blame you for them when one of the suits gets caught. Again.

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.

Re:I don't think the scandals hurt them

[supremebob]

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.

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.

skip banks; go credit unions

[WindBourne]

Seriously, many of the American banks, esp. BOA, are controlled by Chinese banks, which are then funneling the money back to China.
With credit unions, they invest into local businesses.

And CUs are not only not raping people over profits, but are fully separate from FDIC, so they can NOT afford to lose money the way that banks do.

Re:skip banks; go credit unions

[The Good Reverend]

I don't really understand why anyone still uses big banks instead of credit unions for their everyday banking needs. Better customer service, FAR fewer fees, almost all the same options.

Re:skip banks; go credit unions

[Anonymous Coward]

Like BECU and First Tech. I have accounts with both, and the past five or so years they've just become terrible. They're taking away services, like bill pay directly to an account, if you don't have a credit card with them. Ten years ago with Bank of America I setup bill pay directly to my landlord that had an account with BoA. Now, that is no longer allowed since you must have a credit card with a CCV number to set that up. BoA's SafePass is just terrible. I can't even pay my Seattle City Light bill without having a credit card even thought I was able to use bill pay for over a decade before that new requirement blocked me from paying my power bill.

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.

Memorizing is fine. When they internalize it

[raymorris]

> the CEO ultimately resigned.

That's all well and good, but the CEO sets a certain culture for the company. That culture effects everyone, especially management. If ALL the managers who ever talked to the CEO were replaced, you might be able to change the culture fairly quickly.

> round after round of additional ethics training to the point we can all quote it by heart.

Again that's probably not a bad thing. In some companies, the reaction to ethics training is "yada yada yada yeah whatever". In other organizations, people hear of ethical breaches mentioned in ethics training and their reaction is "holy shit someone actually did that?! That's soon fucked up!"

Go bankrupt you rats

[KlomDark]

Fuck that company, go die. Currently trying to get rid of a lien on my house from WF. I have NEVER had a loan from WF. Yet there's a lien for non-payment of some bullshit loan. And when I call them to ask about it, they say I cannot discuss it with them because my phone number is not the one they have on file. Well of course it's not, you fuckers, it was never my loan. My lawyer is spinning in circles trying to get rid of this damn thing.

Fuck you Wells Fargo. Go bankrupt already, you fucking scammers.