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Is wells fargo in financial trouble


is wells fargo in financial trouble

Wells Fargo is one of the last remaining big banks to settle during the housing bubble that ultimately led to the 2008 financial crisis. Well, I believe you've heard of the Japanese bank that introduced bots Heritage Bank, Federal Bank, N26, Wells Fargo, Capital One, USAA. The ur-episode in this regard is probably the series' take on the scandal surrounding Wells Fargo, the supposed “golden child” of the.
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YOU NEED TO LEAVE WELLS FARGO! // 5 Reasons Why I Left Wells Fargo Bank and You Should Too!

Is wells fargo in financial trouble -

JPMorgan, Bank of America: 'Bull-Market Banking,' Says Wells Fargo's Mayo

Fundamentals bode well for the major U.S. banks, such as JPMorgan Chase  (JPM) - Get JPMorgan Chase & Co. (JPM) Report, Bank of America  (BAC) - Get Bank of America Corp Report, Goldman Sachs  (GS) - Get Goldman Sachs Group, Inc. (GS) Report and PNC Financial  (PNC) - Get PNC Financial Services Group, Inc. Report, says the prominent Wells Fargo analyst Mike Mayo.

“It’s bull-market banking,” he told CNBC. “It’s a good time to be long banks. You have credit euphoria.”

Banks should benefit from improved technology, he said. “This is the point that’s most underappreciated about the banks. ... They spent in the last decade retooling with technology.

“We are very big on the technology revolution at banks, and we favor those banks that not only look good in the short term, but also in long term.”

Rising interest rates should help too, Mayo said.

“Once interest rates increase, and the yield curve gets steeper, and the short end goes higher, that is going to be a boon for banks and their net interest margins,” said Mayo. “That’ll be great.”

To be sure, there may be a downside. “If you have too much increase in interest rates, and you have inflation, that could eventually be hell,” Mayo said.

JPMorgan recently traded at $170.77, up 0.4%; Bank of America at $44.65, up 1.2%; Goldman Sachs at $392, up 0.4%; and PNC Financial at $203.60, up 0.9%.

Morningstar analyst Eric Compton likes JPMorgan, too, though he puts fair value at $140. 

It is “arguably the most dominant bank in the U.S.,” he wrote in July.

“With leading investment bank, commercial bank, credit card, retail bank, and asset and wealth management franchises, JPMorgan is truly a force to be reckoned with.”

The major banks begin reporting earnings next week. JPMorgan and Goldman Sachs are scheduled for Tuesday and Bank of America and Wells Fargo on Thursday. PNC is scheduled for next Friday, Oct. 15.

Dan is a freelance writer whose work has appeared in The Wall Street Journal, Barron's, Institutional Investor, The Washington Post and other publications.

Источник: https://www.thestreet.com

Over the course of four years, at least 5,000 Wells Fargo employees opened more than a million fake bank and credit card accounts on behalf of unwitting customers.

Although many bank accounts were deemed “empty” and closed automatically, employees sometimes transferred customer funds to the new accounts, triggering overdraft fees and hurting credit ratings.

This scandal feels different from the mortgage crisis because it was not carried out by the 1 percent – such as wealthy investment bankers indifferent to the effects of their actions on regular homeowners – but by “$12 an hour employees,” as one lawsuit alleged. Even if supervisors encouraged or directed the fraud, it was likely these low-wage workers who actually clicked the button to open those accounts.

These workers likely knew better than most what it’s like to be slapped with unfair overdraft fees or undeserved hits to their credit rating.

So why did they do it?

Situational cheating

Social science research suggests that ethical behavior is not about who you are or the values you hold. Behavior is often a function of the situation in which you make the decision, even factors you barely notice.

This makes cheating more likely to happen in some situations than others. Although many honest Wells Fargo employees realized that opening fake accounts was wrong and refused to do so, it is also the case that other employees who considered themselves honest participated in the fraud.

What would it mean to apply these behavioral insights to the Wells Fargo situation? Here, I draw from White House guidance on how to implement lessons from behavioral science into government policy to identify situational factors that contributed to the fraud.

Repeated reminders of terrifying incentives

“In cases where the goal of an incentive is to encourage a particular behavior, agencies should ensure the incentive is salient to individuals.”

As early as 2010, Wells Fargo imposed extremely aggressive sales goals on its employees. Specifically, they were told to sell at least eight accounts to every customer, compared with an average of three accounts 10 years earlier.

Unmoored from what his salespeople could realistically achieve, the CEO justified this goal on the basis of a simple rhyme, telling shareholders in the bank’s 2010 annual report:

“I’m often asked why we set a cross-sell goal of eight. The answer is, it rhymed with ‘great.’ Perhaps our new cheer should be: ‘Let’s go again, for 10!’”

These goals loomed large when supervisors threatened salespeople who failed to meet them. One former employee interviewed by CNN reported, “I had managers in my face yelling at me” and that “the sales pressure from management was unbearable.”

Another former employee told the LA Times: “We were constantly told we would end up working for McDonald’s… If we did not make the sales quotas … we had to stay for what felt like after-school detention, or report to a call session on Saturdays.”

A lawsuit against Wells Fargo alleges that “employees who failed to resort to illegal tactics were either demoted or fired as a result.”

As the guidance suggests, incentives matter a lot when they are highly salient, or foremost in the employee’s mind. It’s hard for an employee to ignore the threat of losing one’s job or even the threat of embarrassment in front of other employees.

At a bare minimum, Wells Fargo should have done a better job of investigating and stopping the coercive enforcement of its sales goals.

Cheating is contagious

“[I]n many contexts, individuals are motivated by social comparisons, such as learning about the behavior of their peers. Research finds that individuals reduce residential energy consumption when provided with information on how their consumption compares with that of their neighbors.”

While the guidance emphasizes the positive side of social comparisons, they also work the other way: watching others misbehave influences our own misbehavior. We’re more likely to litter in a park full of litter – especially if we observe someone else littering. Watching someone else on our team cheat on a test makes us more likely to do the same.

In his congressional testimony, Wells Fargo CEO John Stumpf made it sound as though the employees responsible were bad apples or lone wolves who disregarded the company’s code of ethics. Although we don’t know the identities of the terminated employees, this is an unlikely explanation for a fraud so widespread.

What is more likely is that the fraud occurred in clusters, as groups of employees rationalized their decisions. This hypothesis is consistent with the CEO’s testimony that branch managers were terminated, suggesting that entire branches may have been infected by cheating.

A lawsuit filed against Wells Fargo also claims that employees shared with one another the know-how used in the fraud. They used shorthand reminiscent of a video game hack: “gaming” referred to opening accounts without authorization, “sandbagging” meant delaying customer requests, “pinning” stood for generating PINs without authorization and “bundling” involved forcing customers to open multiple accounts over customer objections.

This euphemistic terminology allowed employees to lie to themselves about what they were doing, making it seem as though they were gaming the system rather than ripping off customers.

A victimless crime

“Consider the framing of the information presented.”

In retrospect, it seems impossible to believe that any honest person at Wells Fargo would have felt okay about opening fake accounts. But as social scientists Nina Mazar and Daniel Ariely have argued, “people like to think of themselves as honest.” But their research shows that “people behave dishonestly enough to profit but honestly enough to delude themselves of their own integrity.”

In this case, the Wells Fargo employees probably focused on the respects in which their actions were harmless and ignored the downstream implications of what they were doing. Even Stumpf was guilty of this form of self-delusion, explaining to Congress that he initially believed the practices were harmless because empty accounts were “auto-closed” after a certain period of time.

Research suggests that people are more likely to engage in dishonest conduct in which they can tell themselves they’re not stealing money. As implausible as it may seem, Wells Fargo employees may have told themselves they weren’t “stealing” because they weren’t directly removing money from someone’s account. They were just moving it from one account to another.

Technology also tends to have a distancing effect. Pressing buttons on a screen feels morally different from robbing a bank, even if it achieves the same result. That’s sort of the premise of a main plot point in the comedy “Office Space,” when the main characters unleash an algorithm designed to steal fractions of a cent from bank transactions.

Wells Fargo employees may not have considered how their conduct affected customers in terms of overdraft fees or credit ratings. Even if they did, they could rationalize those consequences as outside of their control. In their minds, it was the Wells Fargo algorithm that assessed the overdraft fee. It was the credit rating agencies that make decisions about credit scores. The logic goes something like this clip from “The Simpsons” in which Bart punches the air and marches forward, warning Lisa that if she gets punched, it’s her own fault.

In this case, the customer didn’t even know the punch was coming.

‘I don’t buy it’

As early as 2011, the Wells Fargo board was informed about reports of ethics violations. The cheating continued, leading Wells Fargo to fire at least 1,000 people per year in 2011, 2012 and 2013. Any company that fires 100 people for the same type of cheating, let alone thousands, knows or should know that situational factors are contributing to the cheating.

Instead of addressing that environment, however, the bank allowed the situation to persist. In the words of Representative Sean Duffy, who dismissed the CEO’s claim that they are now “trying” to fix the problem, “We’re five years on! … I don’t buy it.”

So how to fix a culture that’s gone bad?

Although we don’t know what sorts of internal controls Wells Fargo had in place, it should have examined the patterns of cheating and made it both practically – and morally – harder to do.

Five years later, the bank is finally sending customers an email every time a new account is opened and revising its sales goals. It also needs to revisit how supervisors are evaluated and crack down on those who threaten employees over sales targets.

Software could also be used to apply “moral speed bumps” that remind employees engaged in suspicious activity like opening unauthorized accounts that the behavior is wrong and illegal.

Most of all, Wells Fargo needs to send a strong message to its employees about the moral implications of their actions. In my view, that starts with the CEO’s resignation.

Источник: https://theconversation.com/how-wells-fargo-encouraged-employees-to-commit-fraud-66615

This Is America's Worst Bank

Banking & Finance

Does it matter how the public views a company? Does the reaction to its name drive sales of its products or services higher or lower? Brand experts have considered this question for decades. The results are not conclusive. Well-known brands like Facebook are often poorly regarded by the public, yet it has over 2 billion people on its social network. Its stock market value is close to $1 trillion. Chick-fil-A often shows up as one of the best-regarded brands, yet it is among the smaller fast-food chains. In addition, it has been embroiled in controversies over its anti-LGBTQ stances.

The Harris Poll is one of the oldest, most widely regarded polling companies in America. It has done a company reputation survey every year for decades. Recently, it began to do the same poll in tandem with media company Axios. The findings for the 2021 Axios Harris Poll 100 have been released. According to the methodology, 42,935 Americans were surveyed. It involves a two-step process. The first is to find companies that it calls “top of mind,” an equivalent of what most people would call best known. It then asks another, smaller set of people about their impression of those companies that made the first list. The impression is measured across seven metrics: citizenship, ethics, culture, trust, vision, growth, and products and services.

One of America’s largest banks stood out as the worst. Wells Fargo received a score of 63 out of 100, which put it six spots from the bottom of the Harris list. Only the Trump Organization, Sears, Wish.com, Facebook and Fox were below it.

Wells Fargo has been battered by scandal for years, with the worst starting in 2017 when it created as many as 3.5 million fake accounts so that employees could improve their compensation. In 2018, the Federal Reserve punished the bank by restricting the rate at which it could grow. Wells Fargo mistakenly foreclosed on homes later in the year. Management became a revolving door. The fact that many of these problems are three years old shows how difficult it is for a company to salvage a horrible reputation.

Incidentally, at the bottom of the list of 100 companies, with a score of 56.9, is the Trump Organization. This is the business arm of many of the former president’s commercial operations. Almost the entire portfolio of assets held by The Trump Organization is real estate, ranging from golf courses and hotels to residential and commercial buildings. Again, an odd conclusion. While Trump may be abhorred by much of the nation, 74 million people voted for him and he still holds sway over the Republican Party.

Click here to read about the American company with the worst reputation.

Get Our Free Investment Newsletter

Read more: Banking & Finance

Источник: https://247wallst.com/banking-finance/2021/05/21/wells-fargo-is-americas-worst-bank/

U.S. banks continued to disclose exposure to commercial retail borrowers as distress mounts in the space.

Among reporting banks, Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp remain the three with the highest nominal value of loans in the segment as of the end of the second quarter, even after their respective lending totals in various retail categories mostly declined from the first quarter, according to filings.

Data firm Real Capital Analytics estimated in a second-quarter report that "potentially distressed assets" in retail totaled $29.4 billion for the first half of 2020. The inflow of distress during the quarter was more than twice the average quarterly inflow in 2009 in the crux of the global financial crisis, the firm said.

Wells Fargo reported $49.5 billion in loans in three commercial retail categories: commercial and industrial retail lease financing; retail commercial real estate, excluding shopping centers; and commercial real estate shopping centers. The nominal value of Wells Fargo's loans in the commercial and industrial retail lease financing segment declined 16.9% in the second quarter, but, at $23.1 billion, was still the second-highest figure in any category identified by reporting banks at the end of the second quarter. Altogether, Wells Fargo's loans to commercial retail borrowers comprised 5.1% of its gross lending activity.

Bank of America disclosed $35.9 billion in loans across two lending categories — retailing, and food and staples retailing — according to S&P Global Market Intelligence data. The bank's $29.6 billion in loans to retailing borrowers declined 11.8% by nominal value during the second quarter, and its $6.4 billion loans to food and staples retailing borrowers fell 6.1%. Together, the loans comprised 3.6% of the bank's gross lending activity at the end of period.

U.S. Bancorp reported $14.3 billion in loans in its retail category, which includes restaurants. The figure represents a 0.3% decline from the first quarter and 4.5% of the company's gross lending activity at the end of the second quarter.

Amerant Bancorp Inc. and Hope Bancorp Inc. reported high proportional exposure to commercial retail borrowers as of the end of the quarter. Amerant's $1.1 billion balance to retail commercial real estate borrowers represented 19.2% of its gross lending activity, and Hope Bancorp's $2.3 billion in loans in its retail buildings category represented 17.7% of its gross loans.

Cathay General Bancorp, Pinnacle Financial Partners Inc. and Sandy Spring Bancorp Inc. also had relatively high proportional exposure to commercial retail borrowers at 11.2%, 10.4% and 10.2%, respectively.

SNL Image

Click here to see the retail exposure data in Excel.

Источник: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/bank-of-america-wells-fargo-among-us-banks-with-high-retail-exposure-59837494

Beaten-Down Wells Fargo Should Turn a Corner Soon

Don't expect Wells Fargo stock to trade at a deep discount for much longer

By David Moadel, InvestorPlace Contributor Jul 28, 2020, 12:52 pm EST

Because of the onset of the novel coronavirus, the financial sector isn’t having a strong year so far. Wells Fargo (NYSE:WFC) is among the worst-performing big banks, and investors in Wells Fargo stock are understandably frustrated and losing patience.

Wells Fargo Stock Should Be Boosted by the Coming Economic Rebound

Source: Ken Wolter / Shutterstock.com

However, this is not the time to cut and run if you’re a shareholder. If anything, you might consider adding more WFC shares to your banking-sector portfolio.

The history of Wells Fargo stock shows that it consistently rebounded from crashes, albeit not always quickly. Plus, Wells Fargo is taking steps to boost its chances of a recovery. As a result, you can view the low share price not as a problem but as a rare opportunity.

A Closer Look at Wells Fargo Stock

The 2008-2009 financial crisis is the most obvious example. But, there were other crashes in Wells Fargo stock and the share price always recovered. Just be advised that it might take a while for this to happen.

Indeed, there were substantial price corrections in 2015 and 2017 but WFC recovered from both. There was also a correction in 2019 and WFC was poised to stage a full recovery from that one as well.

Then the pandemic happened. WFC isn’t trading at its 52-week low of $22, but it’s much closer to that than its 52-week high of $54.75. Hence, there’s plenty of room for upside. With a trailing 12-month price-earnings ratio of 28.3, it’s fair to say that Wells Fargo stock is by no means overpriced.

Reestablishing the Brand

Since September 2016, Wells Fargo faced damage-control duty in regard to the company’s reputation. That was when Wells Fargo was formally accused by regulators of creating 1.5 million fake deposit accounts.

Additionally, Wells Fargo was accused of creating over 500,000 fake credit cards without the customers’ permission. Eventually CEO John Stumpf was fired, as were 5,300 low-level employees. Plus, Wells Fargo paid $142 million as the result of a class-action lawsuit.

Granted, $142 million is a pittance for a banking giant like Wells Fargo. The real punishment came in the form of a severely damaged reputation for the company. I recall reading postings on social media predicting the beginning of the end for Wells Fargo as a going concern.

Today, Wells Fargo is still a going concern. And, according to Mary Mack, the CEO of consumer and small business banking for Wells Fargo, the company measures its customers’ satisfaction “much more robustly” lately.

Moreover, Wells Fargo initiated efforts to reform its internal culture so employees aren’t incentivized to commit acts like creating false accounts.

Cutting Expenses

Along with rebuilding Wells Fargo’s reputation, it’s encouraging to know that the company intends to reduce its expenses. Specifically, Wells Fargo seeks to cut its expenses by $10 billion annually.

Unfortunately, this means letting go of a large number of employees in the near future. Wells Fargo plans to eliminate thousands of jobs in 2020, and the company intends to cut tens of thousands of jobs eventually.

In addition, Wells Fargo is very likely to close some of its 5,455 U.S. bank branches. This would be a reasonable cost-cutting measure since brick-and-mortar branches aren’t as important as they once were.

It’s not just young people who are doing their banking on their phones and laptops nowadays. The pandemic has kept some customers away from bank branches, so online banking has become a more practical alternative.

The Bottom Line on Wells Fargo Stock

It’s tempting to see Wells Fargo stock as a struggling asset with little chance of recovery. However, history shows that the stock recovered from corrections in the past.

Today, the bank is taking steps to ensure that its stock will, once again, recover from the crash.

David Moadel has provided compelling content and crossed the occasional line on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, David Moadel did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2020/07/beaten-down-wells-fargo-stock-should-turn-a-corner-soon/.

©2021 InvestorPlace Media, LLC

Источник: https://investorplace.com/2020/07/beaten-down-wells-fargo-stock-should-turn-a-corner-soon/

Wells Fargo's latest regulatory stumble puts CEO in hot seat

Wells Fargo is facing a fresh round of questions about its ongoing regulatory troubles in the wake of a recent setback that fostered doubts about the bank’s progress in satisfying its regulators.

During the bank’s third-quarter earnings call, analysts peppered CEO Charlie Scharf with queries about how quickly the bank may resolve regulatory actions over past consumer abuses.

In September, the Office of the Comptroller of the Currency hit Wells with a new $250 million penalty, citing continued problems in its home lending unit and violations of a 2018 consent order.

Bloomberg

“What do you need to do differently, especially as a management team?” JPMorgan Chase analyst Vivek Juneja asked Scharf. He was seeking — but did not receive — a more specific timeline than the “several years” that Scharf said it may take for Wells to “close the remaining gaps.”

Wells Fargo is operating under several regulatory consent orders, most notably an asset cap the Federal Reserve Board imposed in 2018. The cap prevents the San Francisco megabank from growing beyond roughly $1.95 trillion of assets.

Deutsche Bank analyst Matt O’Connor asked Scharf whether investors should expect another “speed bump or potential landmine” in the near future.

Scharf, who joined Wells Fargo in 2019, responded that the bank is focused on ensuring that “we minimize the likelihood of a landmine.” But he repeated a remark he’s made previously — that the bank’s progress may be accompanied by negative developments.

Earlier in the call, Scharf noted that he has overhauled Wells Fargo’s leadership team, and he highlighted the recent expiration of a 2016 consent order with the Consumer Financial Protection Bureau over retail sales practices.

“I believe we're making meaningful progress, and I remain confident in our ability to close the remaining gaps over the next several years,” Scharf said. “Having said that, it continues to be the case that we are likely to have setbacks along the way.”

Wells Fargo is seeking to take advantage of strengthening loan demand, and Scharf downplayed the impact that the Fed’s asset cap could have on the bank’s ability to do so.

Wells is “as open for business as anyone on the asset side” of the balance sheet, which the bank can adjust to ensure it is able to meet clients’ borrowing needs, he said.

“When you're out, you know, hustling for business, we're certainly able to fulfill their needs,” Scharf said, referring to both consumer and corporate clients.

In response to a question about whether the Fed’s asset cap might affect Wells Fargo’s lending aspirations, Chief Financial Officer Michael Santomassimo said the bank has “plenty of capacity to grow” by removing cash that is currently sitting at the Fed or by selling securities if needed.

In remarks last month, Fed Chair Jerome Powell declined to give a timeline on ending Wells Fargo’s asset cap, telling reporters that the restrictions will stay in place until the bank can “fix its widespread and pervasive problems.”

Kenneth Leon, director of equity research at CFRA, said that he is optimistic about what he views as Wells Fargo’s “turnaround story,” though he noted that the asset cap remains a major question mark.

“They’re beginning to change culture, they have senior leaders that know what they’re doing most of them came from the outside,” Leon said in an interview. “Now they’ve got to spread the word and get execution from middle management. That takes time.”

Wells Fargo received mostly positive marks from analysts on its third-quarter financial results, which reflected both progress on its cost-cutting initiative and a slight rebound in loan growth compared to the prior quarter.

Wells Fargo’s loan book grew larger for the first time since the first quarter of 2020. The bank ended the third quarter with $862.8 billion in total loans, roughly a $10.5 billion increase from the prior quarter.

Banks have been struggling to increase their loan balances during the pandemic, partly due to larger savings and government relief funds that have enabled consumers to reduce their credit lines.

Wells reported net income of $5.1 billion, or $1.17 per share, in the quarter, up from $3.2 billion, or 70 cents per share, in the same period last year. The results were boosted by a $1.7 billion decrease in the company’s allowance for credit losses.

Источник: https://www.americanbanker.com/news/wells-fargos-latest-regulatory-stumble-puts-ceo-in-hot-seat

: Is wells fargo in financial trouble

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By Matt Egan, CNN Business

CNN — The Wells Fargo stagecoach is still broken.

The troubled bank reported a 56% decline in profits Wednesday, far exceeding the drops rivals have reported for the quarter. And earnings of 42 cents per share missed estimates.

Wells Fargo's profit drop was driven in part by continued fallout from the bank's various scandals. It reported nearly $1 billion of expenses linked to refunds for customers harmed by what the Federal Reserve has called "widespread consumer abuses."

That hit to the bottom line is in sharp contrast to rivals. Citigroup and Bank of America reported this week more modest third-quarter profit drops of 35% and 16%, respectively -- while JPMorgan Chase, the nation's largest and bank, posted a surprise 4% increase in profit.

More than those peers, Wells Fargo is getting dinged by near-zero interest rates.

Net interest income, a key metric of bank profitability, tumbled 19% to $9.4 billion. While all banks are grappling with historically low interest rates, Wells Fargo can't offset that pain by aggressively is wells fargo in financial trouble -- because of sanctions from the Fed that prevent it from growing its balance edd online sign in low interest rates reduced our net interest income and our expenses continued to remain elevated," Wells Fargo CEO Charlie Scharf said in a statement.

Wells Fargo also continues to grapple with far higher expenses than its rivals.

Noninterest expenses climbed another 5% compared with the second quarter. And the bank reported $718 million of restructuring charges, mostly because of severance packages paid to laid off workers. Wells Fargo's headcount stood at 274,900 as of the end of September, down by 2,200 from the year before.

The good news is that Wells Fargo's revenue fell only 14%, exceeding Wall Street estimates. The bank's credit metrics also improved: Wells Fargo set aside $769 million to cushion the blow from bad loans, which is down sharply from the $9.5 billion it set aside during the second quarter.

Still, Wells Fargo's results provide is wells fargo in financial trouble more evidence of how it has become the nation's weakest big bank.

The Warren Buffett-backed bank has lost more than half its value so far this year, badly trailing its peers. Last quarter, Wells Fargo was the only one to lose money, its first loss since the 2008 financial crisis. Wells Fargo is also the only major lender to cut its dividend, a rare step it last made during the Great Recession.

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Источник: https://www.wral.com/wells-fargo-is-still-in-turmoil-as-profits-plunge-and-customer-refunds-linger/19335728/

This Is America's Worst Bank

Banking & Finance

Does it matter how the public views a company? Does the reaction to its name drive sales of its products or services higher or lower? Bank of america notary service near me experts have considered this question for decades. The results are not conclusive. Well-known brands like Facebook are often poorly regarded by the public, yet it has over 2 billion people on its social network. Its stock market value is close to $1 trillion. Chick-fil-A often shows up as one of the best-regarded brands, yet it is among the smaller fast-food chains. In addition, it has been embroiled in controversies over its anti-LGBTQ stances.

The Harris Poll is one of the oldest, most widely regarded polling companies in America. It has done a company reputation survey every year for decades. Recently, it began to do the same poll in tandem with media company Axios. The findings for the 2021 Axios Harris Poll 100 have been released. According to the methodology, 42,935 Americans were surveyed. It involves a two-step process. The first is to find companies that it calls “top of mind,” an equivalent of what most people would call best known. It then asks another, smaller set of people about their impression of those companies that made the first list. The impression is measured across seven metrics: citizenship, ethics, culture, trust, vision, growth, and products and services.

One of America’s largest banks stood out as the worst. Wells Fargo received a score of 63 out of 100, which put it six spots from the bottom of the Harris list. Only the Trump Organization, Sears, Wish.com, Facebook and Fox were below it.

Wells Fargo has been battered by scandal for years, with the worst starting in 2017 when it created as many as 3.5 million fake accounts so that employees could improve their compensation. In 2018, the Federal Reserve punished the bank by restricting the rate at which it could grow. Wells Fargo mistakenly foreclosed on homes later in the year. Management became a revolving door. The fact that many of these problems is wells fargo in financial trouble three years old shows how difficult it is for a company to salvage a horrible reputation.

Incidentally, at the bottom of the list of 100 companies, with a score of 56.9, is the Trump Organization. This is the business arm of many of the former president’s commercial operations. Almost the entire portfolio of assets held by The Trump Organization is real estate, ranging from golf courses and hotels to residential and commercial buildings. Again, an odd conclusion. While Trump may be is wells fargo in financial trouble by much of the nation, 74 million people voted for him and he still holds sway over the Republican Party.

Click here to read about the American company with the worst reputation.

Get Our Free Investment Newsletter

Read more: Banking & Finance

Источник: https://247wallst.com/banking-finance/2021/05/21/wells-fargo-is-americas-worst-bank/

U.S. banks continued to disclose exposure to commercial retail borrowers as distress mounts in the space.

Among reporting banks, Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp remain the three with the highest nominal value of loans in the segment as of the end of the second quarter, even after their respective lending totals in various retail categories mostly declined from the first quarter, according to filings.

Data firm Real Capital Analytics estimated in a second-quarter report that "potentially distressed assets" in retail totaled $29.4 billion for the first half of 2020. The inflow of distress during the quarter was more than twice the average quarterly inflow in 2009 in the crux of the global financial crisis, the firm said.

Wells Fargo reported $49.5 billion in loans in three commercial retail categories: commercial and industrial retail lease financing; retail commercial real estate, excluding shopping centers; and commercial real estate shopping centers. The nominal value of Wells Fargo's loans in the commercial and industrial retail lease financing segment declined 16.9% in the second quarter, but, at $23.1 billion, was still the second-highest figure in any category identified by reporting banks at the end of the second quarter. Altogether, Wells Fargo's loans to commercial retail borrowers comprised 5.1% of its gross lending activity.

Bank of America disclosed $35.9 billion in loans across two lending categories — retailing, and food and staples retailing — according to S&P Global Market Intelligence data. The is wells fargo in financial trouble $29.6 billion in loans to retailing borrowers declined 11.8% by nominal value during the second quarter, and its $6.4 billion loans to food and staples retailing borrowers fell 6.1%. Together, the loans comprised 3.6% of the bank's gross lending activity at the end of period.

U.S. Bancorp reported $14.3 billion in loans in its retail category, which includes restaurants. The figure represents a 0.3% decline from the first quarter and 4.5% of the company's gross lending activity at the end of the second quarter.

Amerant Bancorp Inc. and Hope Bancorp Inc. reported high proportional exposure to commercial retail borrowers as of the end of the quarter. Amerant's $1.1 billion balance to retail commercial real estate borrowers represented 19.2% of its gross lending activity, and Hope Bancorp's $2.3 billion in loans in its retail buildings category represented 17.7% of its gross loans.

Cathay General Bancorp, Pinnacle Financial Partners Inc. and Sandy Spring Bancorp Inc. also had relatively high proportional exposure to commercial retail borrowers at 11.2%, 10.4% and 10.2%, respectively.

SNL Image

Click here to see the retail exposure data in Excel.

Источник: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/bank-of-america-wells-fargo-among-us-banks-with-high-retail-exposure-59837494

Wells Fargo to pay $2.1 billion for role in housing bubble

NEW YORK (AP) — Wells Fargo agreed Wednesday to pay a $2.1 billion fine to settle allegations it misrepresented the types of mortgages it sold to investors during the housing bubble that ultimately led to the 2008 financial crisis.

The amount is relatively smaller than the fines paid by Bank of Is wells fargo in financial trouble, Citigroup, Goldman Sachs and other big banks in the years following the financial crisis to settle similar allegations. Wells Fargo is one of the last remaining big banks to settle charges related to its role in the subprime mortgage crisis.

The fine is unrelated to the more recent scandals that have plagued Wells in the last three years, such as the opening of millions of fake accounts for customers without their authorization in order to meet unrealistic sales quotas, or the bundling of auto insurance policies on to auto loans when customers did not need them.

The government accused Wells and many other big banks of understating the risk and quality of the mortgages they sold to investors at the height of the housing bubble, in Wells’ case between 2005 and 2007. These investors bought up tens of billions of dollars in mortgages from Wells and is wells fargo in financial trouble banks, and experienced massive losses when borrowers failed to repay and housing prices collapsed nationwide.

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The Department of Justice said Wells Fargo sold at least 73,500 loans that had poor underwriting standards to investors. Half of those loans defaulted, resulting in billions of dollars in losses to investors.

“This settlement holds Wells Fargo accountable for actions that contributed to the financial crisis,” said Acting Associate Attorney General Jesse Panuccio, in a statement.

In earlier settlements with the Justice Department, Bank of America paid a $5 billion fine to authorities in 2014 for similar allegations, and Citigroup paid a $4 billion fine.

Wells Fargo said in a statement it was “pleased to put behind us these legacy issues” and said it had previously set aside the money to cover the settlement.

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Ken Sweet covers banks, and the Consumer Financial Protection Bureau for The Associated Press. Follow him on Twitter at @kensweet.

Источник: https://www.seattletimes.com/business/wells-fargo-to-pay-2-1-billion-for-role-in-housing-bubble/

Wells Fargo's latest regulatory stumble puts CEO in hot seat

Wells Fargo is facing a fresh round of questions about its ongoing regulatory troubles in the wake of a recent setback that fostered doubts about the bank’s progress in satisfying its regulators.

During the bank’s third-quarter earnings call, analysts peppered CEO Charlie Scharf with queries about how quickly the bank may resolve regulatory actions over past consumer abuses.

In September, the Office of the Comptroller of the Currency hit Wells with a new $250 million penalty, citing continued problems in its home lending unit and violations of a 2018 consent order.

Bloomberg

“What do you need to do differently, especially as a management team?” JPMorgan Chase analyst Vivek Juneja asked Scharf. He was seeking — but did not receive — a more specific timeline than the “several years” that Scharf said it may take for Wells to “close the remaining gaps.”

Wells Fargo is operating under several regulatory consent orders, most notably an asset cap the Federal Reserve Board imposed in 2018. The cap prevents the San Francisco megabank from growing beyond roughly $1.95 trillion of assets.

Deutsche Bank analyst Matt O’Connor asked Scharf whether investors should expect another “speed bump or potential landmine” in the near future.

Scharf, who joined Wells Fargo in 2019, responded that the bank is focused on ensuring that “we minimize the likelihood of a landmine.” But he repeated a remark he’s made previously — that the bank’s progress may be accompanied by negative developments.

Earlier in the call, Scharf noted that he has overhauled Wells Fargo’s leadership team, and he highlighted the recent expiration of a 2016 consent order with the Consumer Financial Protection Bureau over retail sales practices.

“I believe we're making meaningful progress, and I remain confident in our ability to close the remaining gaps over the next several years,” Scharf said. “Having said that, it continues to be the case that we are likely to have setbacks along the way.”

Wells Fargo is seeking to take advantage of strengthening loan demand, and Scharf downplayed the impact that the Fed’s asset cap could have on the bank’s ability to do so.

Wells is “as open for business as anyone on the asset side” of the balance sheet, which the bank can adjust to ensure it is able to meet clients’ borrowing needs, he said.

“When you're out, you know, hustling for business, we're certainly able to fulfill their needs,” Scharf said, referring to both consumer and corporate clients.

In response to a question is wells fargo in financial trouble whether the Fed’s asset cap might affect Wells Fargo’s lending aspirations, Chief Financial Officer Michael Santomassimo said the bank has “plenty of capacity to grow” by removing cash that is currently sitting at the Fed or by selling securities if needed.

In remarks last month, Fed Chair Jerome Powell declined to give a timeline on ending Wells Fargo’s asset cap, telling reporters that the restrictions will stay in place until the bank can “fix its widespread and pervasive problems.”

Kenneth Leon, director of equity research at CFRA, said that he is optimistic about allied savings bank contact number he views as Wells Fargo’s “turnaround story,” though he noted that the asset cap remains a major question mark.

“They’re beginning to change culture, they have senior leaders that know what they’re doing most of them came from the outside,” Leon said in an interview. “Now they’ve got to spread the word and get execution from middle management. That takes time.”

Wells Fargo received mostly positive marks from analysts on its third-quarter financial results, which reflected both progress on its cost-cutting initiative and a slight rebound in loan growth compared to the prior quarter.

Wells Fargo’s loan book grew larger for the first time since the first quarter of 2020. The bank ended the third quarter with $862.8 billion in total loans, roughly a $10.5 billion increase from the prior quarter.

Banks have been struggling to increase their loan balances during the pandemic, partly due to larger savings and government relief funds that have enabled consumers to reduce their credit lines.

Wells reported net income of $5.1 billion, or $1.17 per share, in the quarter, up from $3.2 billion, or 70 cents per share, in the same period last year. The results were boosted by a $1.7 billion decrease in the company’s allowance for credit losses.

Источник: https://www.americanbanker.com/news/wells-fargos-latest-regulatory-stumble-puts-ceo-in-hot-seat

Is wells fargo in financial trouble -

JPMorgan, Bank of America: 'Bull-Market Banking,' Says Wells Fargo's Mayo

Fundamentals bode well for the major U.S. banks, such as JPMorgan Chase  (JPM) - Get JPMorgan Chase & Co. (JPM) Report, Bank of America  (BAC) - Get Bank of America Corp Report, Goldman Sachs  (GS) - Get Goldman Sachs Group, Inc. (GS) Report and PNC Financial  (PNC) - Get PNC Financial Services Group, Inc. Report, says the prominent Wells Fargo analyst Mike Mayo.

“It’s bull-market banking,” he told CNBC. “It’s a good time to be long banks. You have credit euphoria.”

Banks should benefit from improved technology, he said. “This is the point that’s most underappreciated about the banks. ... They spent in the last decade retooling with technology.

“We are very big on the technology revolution at banks, and we favor those banks that not only look good in the short term, but also in long term.”

Rising interest rates should help too, Mayo said.

“Once interest rates increase, and the yield curve gets steeper, and the short end goes higher, that is going to be a boon for banks and their net interest margins,” said Mayo. “That’ll be great.”

To be sure, there may be a downside. “If you have too much increase in interest rates, and you have inflation, that could eventually be hell,” Mayo said.

JPMorgan recently traded at $170.77, up 0.4%; Bank of America at $44.65, up 1.2%; Goldman Sachs at $392, up 0.4%; and PNC Financial at $203.60, up 0.9%.

Morningstar analyst Eric Compton likes JPMorgan, too, though he puts fair value at $140. 

It is “arguably the most dominant bank in the U.S.,” he wrote in July.

“With leading investment bank, commercial bank, credit card, retail bank, and asset and wealth management franchises, JPMorgan is truly a force to be reckoned with.”

The major banks begin reporting earnings next week. JPMorgan and Goldman Sachs are scheduled for Tuesday and Bank of America and Wells Fargo on Thursday. PNC is scheduled for next Friday, Oct. 15.

Dan is a freelance writer whose work has appeared in The Wall Street Journal, Barron's, Institutional Investor, The Washington Post and other publications.

Источник: https://www.thestreet.com

U.S. banks continued to disclose exposure to commercial retail borrowers as distress mounts in the space.

Among reporting banks, Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp remain the three with the highest nominal value of loans in the segment as of the end of the second quarter, even after their respective lending totals in various retail categories mostly declined from the first quarter, according to filings.

Data firm Real Capital Analytics estimated in a second-quarter report that "potentially distressed assets" in retail totaled $29.4 billion for the first half of 2020. The inflow of distress during the quarter was more than twice the average quarterly inflow in 2009 in the crux of the global financial crisis, the firm said.

Wells Fargo reported $49.5 billion in loans in three commercial retail categories: commercial and industrial retail lease financing; retail commercial real estate, excluding shopping centers; and commercial real estate shopping centers. The nominal value of Wells Fargo's loans in the commercial and industrial retail lease financing segment declined 16.9% in the second quarter, but, at $23.1 billion, was still the second-highest figure in any category identified by reporting banks at the end of the second quarter. Altogether, Wells Fargo's loans to commercial retail borrowers comprised 5.1% of its gross lending activity.

Bank of America disclosed $35.9 billion in loans across two lending categories — retailing, and food and staples retailing — according to S&P Global Market Intelligence data. The bank's $29.6 billion in loans to retailing borrowers declined 11.8% by nominal value during the second quarter, and its $6.4 billion loans to food and staples retailing borrowers fell 6.1%. Together, the loans comprised 3.6% of the bank's gross lending activity at the end of period.

U.S. Bancorp reported $14.3 billion in loans in its retail category, which includes restaurants. The figure represents a 0.3% decline from the first quarter and 4.5% of the company's gross lending activity at the end of the second quarter.

Amerant Bancorp Inc. and Hope Bancorp Inc. reported high proportional exposure to commercial retail borrowers as of the end of the quarter. Amerant's $1.1 billion balance to retail commercial real estate borrowers represented 19.2% of its gross lending activity, and Hope Bancorp's $2.3 billion in loans in its retail buildings category represented 17.7% of its gross loans.

Cathay General Bancorp, Pinnacle Financial Partners Inc. and Sandy Spring Bancorp Inc. also had relatively high proportional exposure to commercial retail borrowers at 11.2%, 10.4% and 10.2%, respectively.

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Click here to see the retail exposure data in Excel.

Источник: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/bank-of-america-wells-fargo-among-us-banks-with-high-retail-exposure-59837494

Wells Fargo warns investors that the bank is likely to face more regulatory setbacks

The disclosure shows that CEO Charles Scharf, who took over two years ago, is still consumed with cleaning up the mess revealed by the bank's 2016 fake-accounts scandal. In September, the Office of the Comptroller of the Currency hit the bank with a $250 million fine tied to its mortgage division.

Scharf told analysts last month that the latest fine indicates that despite resolving a pair of consent orders, the company is "likely to have setbacks" over the next few years as the CEO and his deputies work to improve its compliance functions.

When an analyst pressed for more information on the setbacks, Scharf noted the complex set of consent orders the bank was working on.

"I just want to make sure that people understand that we have these things that are out there and don't want you to be surprised if something happens," Scharf said.

A Wells Fargo spokesperson declined to comment beyond the filing. Shares of the bank have surged more than 70% this year amid a broader rebound in financial companies.

— CNBC's Michael Bloom contributed to this report.

Источник: https://www.cnbc.com/2021/11/03/wells-fargo-warns-investors-that-the-bank-is-likely-to-face-more-regulatory-setbacks-.html

Over the course of four years, at least 5,000 Wells Fargo employees opened more than a million fake bank and credit card accounts on behalf of unwitting customers.

Although many bank accounts were deemed “empty” and closed automatically, employees sometimes transferred customer funds to the new accounts, triggering overdraft fees and hurting credit ratings.

This scandal feels different from the mortgage crisis because it was not carried out by the 1 percent – such as wealthy investment bankers indifferent to the effects of their actions on regular homeowners – but by “$12 an hour employees,” as one lawsuit alleged. Even if supervisors encouraged or directed the fraud, it was likely these low-wage workers who actually clicked the button to open those accounts.

These workers likely knew better than most what it’s like to be slapped with unfair overdraft fees or undeserved hits to their credit rating.

So why did they do it?

Situational cheating

Social science research suggests that ethical behavior is not about who you are or the values you hold. Behavior is often a function of the situation in which you make the decision, even factors you barely notice.

This makes cheating more likely to happen in some situations than others. Although many honest Wells Fargo employees realized that opening fake accounts was wrong and refused to do so, it is also the case that other employees who considered themselves honest participated in the fraud.

What would it mean to apply these behavioral insights to the Wells Fargo situation? Here, I draw from White House guidance on how to implement lessons from behavioral science into government policy to identify situational factors that contributed to the fraud.

Repeated reminders of terrifying incentives

“In cases where the goal of an incentive is to encourage a particular behavior, agencies should ensure the incentive is salient to individuals.”

As early as 2010, Wells Fargo imposed extremely aggressive sales goals on its employees. Specifically, they were told to sell at least eight accounts to every customer, compared with an average of three accounts 10 years earlier.

Unmoored from what his salespeople could realistically achieve, the CEO justified this goal on the basis of a simple rhyme, telling shareholders in the bank’s 2010 annual report:

“I’m often asked why we set a cross-sell goal of eight. The answer is, it rhymed with ‘great.’ Perhaps our new cheer should be: ‘Let’s go again, for 10!’”

These goals loomed large when supervisors threatened salespeople who failed to meet them. One former employee interviewed by CNN reported, “I had managers in my face yelling at me” and that “the sales pressure from management was unbearable.”

Another former employee told the LA Times: “We were constantly told we would end up working for McDonald’s… If we did not make the sales quotas … we had to stay for what felt like after-school detention, or report to a call session on Saturdays.”

A lawsuit against Wells Fargo alleges that “employees who failed to resort to illegal tactics were either demoted or fired as a result.”

As the guidance suggests, incentives matter a lot when they are highly salient, or foremost in the employee’s mind. It’s hard for an employee to ignore the threat of losing one’s job or even the threat of embarrassment in front of other employees.

At a bare minimum, Wells Fargo should have done a better job of investigating and stopping the coercive enforcement of its sales goals.

Cheating is contagious

“[I]n many contexts, individuals are motivated by social comparisons, such as learning about the behavior of their peers. Research finds that individuals reduce residential energy consumption when provided with information on how their consumption compares with that of their neighbors.”

While the guidance emphasizes the positive side of social comparisons, they also work the other way: watching others misbehave influences our own misbehavior. We’re more likely to litter in a park full of litter – especially if we observe someone else littering. Watching someone else on our team cheat on a test makes us more likely to do the same.

In his congressional testimony, Wells Fargo CEO John Stumpf made it sound as though the employees responsible were bad apples or lone wolves who disregarded the company’s code of ethics. Although we don’t know the identities of the terminated employees, this is an unlikely explanation for a fraud so widespread.

What is more likely is that the fraud occurred in clusters, as groups of employees rationalized their decisions. This hypothesis is consistent with the CEO’s testimony that branch managers were terminated, suggesting that entire branches may have been infected by cheating.

A lawsuit filed against Wells Fargo also claims that employees shared with one another the know-how used in the fraud. They used shorthand reminiscent of a video game hack: “gaming” referred to opening accounts without authorization, “sandbagging” meant delaying customer requests, “pinning” stood for generating PINs without authorization and “bundling” involved forcing customers to open multiple accounts over customer objections.

This euphemistic terminology allowed employees to lie to themselves about what they were doing, making it seem as though they were gaming the system rather than ripping off customers.

A victimless crime

“Consider the framing of the information presented.”

In retrospect, it seems impossible to believe that any honest person at Wells Fargo would have felt okay about opening fake accounts. But as social scientists Nina Mazar and Daniel Ariely have argued, “people like to think of themselves as honest.” But their research shows that “people behave dishonestly enough to profit but honestly enough to delude themselves of their own integrity.”

In this case, the Wells Fargo employees probably focused on the respects in which their actions were harmless and ignored the downstream implications of what they were doing. Even Stumpf was guilty of this form of self-delusion, explaining to Congress that he initially believed the practices were harmless because empty accounts were “auto-closed” after a certain period of time.

Research suggests that people are more likely to engage in dishonest conduct in which they can tell themselves they’re not stealing money. As implausible as it may seem, Wells Fargo employees may have told themselves they weren’t “stealing” because they weren’t directly removing money from someone’s account. They were just moving it from one account to another.

Technology also tends to have a distancing effect. Pressing buttons on a screen feels morally different from robbing a bank, even if it achieves the same result. That’s sort of the premise of a main plot point in the comedy “Office Space,” when the main characters unleash an algorithm designed to steal fractions of a cent from bank transactions.

Wells Fargo employees may not have considered how their conduct affected customers in terms of overdraft fees or credit ratings. Even if they did, they could rationalize those consequences as outside of their control. In their minds, it was the Wells Fargo algorithm that assessed the overdraft fee. It was the credit rating agencies that make decisions about credit scores. The logic goes something like this clip from “The Simpsons” in which Bart punches the air and marches forward, warning Lisa that if she gets punched, it’s her own fault.

In this case, the customer didn’t even know the punch was coming.

‘I don’t buy it’

As early as 2011, the Wells Fargo board was informed about reports of ethics violations. The cheating continued, leading Wells Fargo to fire at least 1,000 people per year in 2011, 2012 and 2013. Any company that fires 100 people for the same type of cheating, let alone thousands, knows or should know that situational factors are contributing to the cheating.

Instead of addressing that environment, however, the bank allowed the situation to persist. In the words of Representative Sean Duffy, who dismissed the CEO’s claim that they are now “trying” to fix the problem, “We’re five years on! … I don’t buy it.”

So how to fix a culture that’s gone bad?

Although we don’t know what sorts of internal controls Wells Fargo had in place, it should have examined the patterns of cheating and made it both practically – and morally – harder to do.

Five years later, the bank is finally sending customers an email every time a new account is opened and revising its sales goals. It also needs to revisit how supervisors are evaluated and crack down on those who threaten employees over sales targets.

Software could also be used to apply “moral speed bumps” that remind employees engaged in suspicious activity like opening unauthorized accounts that the behavior is wrong and illegal.

Most of all, Wells Fargo needs to send a strong message to its employees about the moral implications of their actions. In my view, that starts with the CEO’s resignation.

Источник: https://theconversation.com/how-wells-fargo-encouraged-employees-to-commit-fraud-66615

Beaten-Down Wells Fargo Should Turn a Corner Soon

Don't expect Wells Fargo stock to trade at a deep discount for much longer

By David Moadel, InvestorPlace Contributor Jul 28, 2020, 12:52 pm EST

Because of the onset of the novel coronavirus, the financial sector isn’t having a strong year so far. Wells Fargo (NYSE:WFC) is among the worst-performing big banks, and investors in Wells Fargo stock are understandably frustrated and losing patience.

Wells Fargo Stock Should Be Boosted by the Coming Economic Rebound

Source: Ken Wolter / Shutterstock.com

However, this is not the time to cut and run if you’re a shareholder. If anything, you might consider adding more WFC shares to your banking-sector portfolio.

The history of Wells Fargo stock shows that it consistently rebounded from crashes, albeit not always quickly. Plus, Wells Fargo is taking steps to boost its chances of a recovery. As a result, you can view the low share price not as a problem but as a rare opportunity.

A Closer Look at Wells Fargo Stock

The 2008-2009 financial crisis is the most obvious example. But, there were other crashes in Wells Fargo stock and the share price always recovered. Just be advised that it might take a while for this to happen.

Indeed, there were substantial price corrections in 2015 and 2017 but WFC recovered from both. There was also a correction in 2019 and WFC was poised to stage a full recovery from that one as well.

Then the pandemic happened. WFC isn’t trading at its 52-week low of $22, but it’s much closer to that than its 52-week high of $54.75. Hence, there’s plenty of room for upside. With a trailing 12-month price-earnings ratio of 28.3, it’s fair to say that Wells Fargo stock is by no means overpriced.

Reestablishing the Brand

Since September 2016, Wells Fargo faced damage-control duty in regard to the company’s reputation. That was when Wells Fargo was formally accused by regulators of creating 1.5 million fake deposit accounts.

Additionally, Wells Fargo was accused of creating over 500,000 fake credit cards without the customers’ permission. Eventually CEO John Stumpf was fired, as were 5,300 low-level employees. Plus, Wells Fargo paid $142 million as the result of a class-action lawsuit.

Granted, $142 million is a pittance for a banking giant like Wells Fargo. The real punishment came in the form of a severely damaged reputation for the company. I recall reading postings on social media predicting the beginning of the end for Wells Fargo as a going concern.

Today, Wells Fargo is still a going concern. And, according to Mary Mack, the CEO of consumer and small business banking for Wells Fargo, the company measures its customers’ satisfaction “much more robustly” lately.

Moreover, Wells Fargo initiated efforts to reform its internal culture so employees aren’t incentivized to commit acts like creating false accounts.

Cutting Expenses

Along with rebuilding Wells Fargo’s reputation, it’s encouraging to know that the company intends to reduce its expenses. Specifically, Wells Fargo seeks to cut its expenses by $10 billion annually.

Unfortunately, this means letting go of a large number of employees in the near future. Wells Fargo plans to eliminate thousands of jobs in 2020, and the company intends to cut tens of thousands of jobs eventually.

In addition, Wells Fargo is very likely to close some of its 5,455 U.S. bank branches. This would be a reasonable cost-cutting measure since brick-and-mortar branches aren’t as important as they once were.

It’s not just young people who are doing their banking on their phones and laptops nowadays. The pandemic has kept some customers away from bank branches, so online banking has become a more practical alternative.

The Bottom Line on Wells Fargo Stock

It’s tempting to see Wells Fargo stock as a struggling asset with little chance of recovery. However, history shows that the stock recovered from corrections in the past.

Today, the bank is taking steps to ensure that its stock will, once again, recover from the crash.

David Moadel has provided compelling content and crossed the occasional line on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, David Moadel did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2020/07/beaten-down-wells-fargo-stock-should-turn-a-corner-soon/.

©2021 InvestorPlace Media, LLC

Источник: https://investorplace.com/2020/07/beaten-down-wells-fargo-stock-should-turn-a-corner-soon/

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