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Saving For a Space Ship

A decade after the financial crisis, Wells Fargo is stung by housing bubble bad behavior

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 http://www.mysanantonio.com/business/article/Wells-Fargo-hit-by-surprise-charge-from-12275940.php

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The company took a surprise $1 billion charge in the quarter for previously disclosed regulatory investigations into its pre-crisis mortgage activity, the third-largest U.S. lender said Friday in a statement. The expense pushed total costs to a record $14.4 billion.

This latest hit adds to Chief Executive Officer Tim Sloan’s challenges, 13 months after the San Francisco-based bank was rocked by a fake accounts scandal. Wells Fargo has struggled to attract customers after news broke last year that branch bankers opened thousands of accounts without customer approval to meet aggressive sales targets. More recently, it’s come under fire over auto-loan clients who were forced to pay for unwanted car insurance and mortgage customers who were improperly charged fees.

“That charge was something of a surprise for us, but let us leave that on the side and the underlying trends remains in a lackluster trend,” Chris Kotowski, an analyst at Oppenheimer & Co., said in a note Friday.

The bank is one of the last firms not to have settled with regulators and the Justice Department over its handling of home loans in the run up to the housing crisis. It provided more detail earlier this year in its annual securities filing...

Net income fell 19 percent from the year earlier period to $4.6 billion. Analysts expected $5.13 billion.

 

Wells Fargo also had trouble in its underlying businesses. Revenue in the third-largest U.S. bank’s community banking division, the home for all the lending it does to America’s consumers, fell to $12.1 billion, the lowest since the quarter after news broke about the fake accounts. Net income in the unit, which generates about 60 percent of Wells Fargo’s profit, plunged 31 percent to $2.23 billion.

New auto loans declined 6 percent to $4.3 billion from the second quarter, when the firm lost its title as the largest auto lender to Ally Financial. Mortgage banking fees tumbled for the fifth straight quarter to $1.05 billion as demand from homeowners for refinancing continued to wane amid rising interest rates. Originations ticked up compared to the second quarter to $59 billion.

Fees from credit cards were flat compared to the year earlier at $1 billion. Revenue growth from that business has been declining over the last two years and customers opened fewer accounts in the first six months after the scandal. The firm earlier this year stopped reporting how many new card applications customers submitted.

Adding to difficulties in the consumer bank, commercial loans have also flagged, slumping almost $6 billion from the second quarter to end the period at about $500 billion. Total loans declined 1 percent from the year earlier to $952 billion. The firm set aside $717 million to cover bad loans in the period, in line with analysts’ $718 million expectation.

Expenses, which have been elevated since the fake account scandal broke, rose 8 percent. 

 

Edited by Saving For a Space Ship

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What is amazing is that these organisations carry on as if nothing had happened. Fines for regulatory breach or criminal behavior are simply items in the P & L and something for the annual report; the notion of moral hazard seems to be buried.

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Western world controlled by banks,   Bank culture zero morals naturally money is everything ipso facto western culture is being programmed to operate with zero morals, get one over on your fellow man for a quick buck is just the cost of doing business 

 

the punchline is of course money is an illusion but try telling that to the guy trying to steal your tenner

 

 

 

 

 

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  • 298 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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