Wells Fargo Shares Dip As Bank Fires 4 FX Traders Following Investigations

Wells Fargo CEO Tim Sloan received the patented Elizabeth Warren treatment during testimony before the Senate Banking Committee last month when the Massachusetts Senator accused him of sharing in the blame for the bank’s fraudulent sales practices and opined that he ‘should be fired’, echoing comments she made about his predecessor, John Stumpf, a year earlier.
And just as the CEO has been making the media rounds to try to rehabilitate the bank’s battered public image, yet another scandal appears to be breaking – but this time it originated in the bank’s investment banking unit.
WSJ reported that the bank has fired four foreign-exchange bankers amid an investigation into that business by both the bank and regulators.
While the nature of the purported misconduct is unclear judging by the report, in an amusing coincidence, the news of the firings broke as former-HSBC FX trader Mark Johnson awaits the verdict on whether he defrauded a client when he was running part of HSBC’s FX sales business in London. WSJ reports the bankers were fired for cause.

This post was published at Zero Hedge on Oct 20, 2017.

Wells Fargo Gets Clocked in California

Why is Tim Sloan still CEO, asks California Treasurer. In a letter so brutally scathing it’s practically funny, California Treasurer John Chiang skewers Wells Fargo, its Board of Directors, and its new CEO Tim Sloan. And he extended the sanctions on Wells Fargo, first imposed in September last year, by ‘at least’ another year.
The Treasurer’s office oversees ‘nearly $2 trillion in annual banking transactions, manages a $75 billion investment pool, and is the nation’s largest issuer of municipal debt,’ Chiang pointed out last year when he imposed the sanctions on Wells Fargo’s ‘most highly profitable business relationships with the State of California.’ Those sanctions include:
Suspension of investments by the Treasurer’s Office in all Wells Fargo securities. Suspension of the use of Wells Fargo as a broker-dealer for purchasing of investments by his office. Suspension of Wells Fargo as a managing underwriter on negotiated sales of California state bonds where the Treasurer appoints the underwriter.

This post was published at Wolf Street on Oct 17, 2017.

California Treasurer Skewers Wells Fargo, Wonders Why Tim Sloan is Still CEO, Extends Sanctions

‘The cockroaches infiltrated’ the bank, as ‘systemic corruption and venal abuse of customers’ have become ‘part of Wells Fargo’s brand.’
In a letter so brutally scathing it’s practically funny, California Treasurer John Chiang skewers Wells Fargo, its Board of Directors, and its new CEO Tim Sloan. And he extended the sanctions on Wells Fargo, first imposed in September last year, by ‘at least’ another year.
The Treasurer’s office oversees ‘nearly $2 trillion in annual banking transactions, manages a $75 billion investment pool, and is the nation’s largest issuer of municipal debt,’ Chiang pointed out last year when he imposed the sanctions on Wells Fargo’s ‘most highly profitable business relationships with the State of California.’ Those sanctions include:
Suspension of investments by the Treasurer’s Office in all Wells Fargo securities. Suspension of the use of Wells Fargo as a broker-dealer for purchasing of investments by his office. Suspension of Wells Fargo as a managing underwriter on negotiated sales of California state bonds where the Treasurer appoints the underwriter. With these sanctions, Chiang sought ‘real accountability and lasting reforms.’ But it’s a long and complex relationship that dates back to the Gold Rush era:
Wells Fargo has evolved to become the nation’s second largest bank by total assets. California is set to become the world’s fifth largest economy. What we each do, therefore, matters and effects the public interest.

This post was published at Wolf Street on Oct 17, 2017.

More Bad News For Autos: Wells Fargo Car Loan Originations Crash To All Time Low

Joining the Q3 roster of banks that beat yet which all surprised investors with a cautionary red flag (for the other banks this involved a drop in FICC trading revenue and a sharp increase in loan loss reserves), moments ago Wells Fargo also reported better than expected Q3 EPS of $1.04 (exp. $1.03) which however was the result of a material 20 cent litigation accrual addback to a GAAP EPS of $0.84, indicating that management is expecting significant lawsuits in the coming months. Worse, the bank missed badly on the top line (revenue of $21.9bn vs exp. $22.4bn), but the reason why the stock has tanked by over 3% pre market is the unexpected miss in the company’s Net Interest Margin, which slumped from 2.90% to 2.87%, well below the 2.92% expected, and resulting in a lower sequential Net Interest Income number of $12.476 billion.
Not helping matters is that the company’s mortgage loan pipeline once again took a sharp leg lower.

This post was published at Zero Hedge on Oct 13, 2017.

Wells Fargo’s Artificial Intelligence Defies Analysts, Slaps ‘Sell’ on Google and Facebook

Oh the irony!
Google, which makes almost all of its money on ads and internet user data, is undertaking herculean efforts to get a grip on artificial intelligence (AI). It’s trying to develop software that allows machines to think and learn like humans. It’s spending enormous resources on it. This includes the $525 million acquisition in 2014 of DeepMind, which is said to have lost an additional $162 million in 2016. Google is trying to load smartphones with AI and come up with AI smart speakers and other gadgets, and ultimately AI systems that control self-driving cars.
Facebook, which also makes most of its money on ads and user data, is on a similar trajectory, but spreading into other directions, including a ‘creepy’ run-in with two of its bots that were supposed to negotiate with each other but ended up drifting off human language and invented their own languagethat humans couldn’t understand.
And here comes an AI bot developed by stock analysts at Wells Fargo Securities. The human analysts have an ‘outperform’ rating on Google’s parent Alphabet and on Facebook. They worked with a data scientist at Amazon’s Alexa project to create the AI bot. And after six months of work, the AI bot was allowed to do its job. According to their note to clients on Friday, reported by Bloomberg, the AI bot promptly slapped a ‘sell’ rating on Google and Facebook.

This post was published at Wolf Street by Wolf Richter ‘ Oct 7, 2017.

New Robot Equity Analyst Hits Facebook And Google With A Sell Rating

It should come as a surprise to precisely no one reading this post that wall street equity analysts have a ‘slight’ bias toward “Buy” ratings. After all, equity analysts aren’t really in the business of helping clients make buy/sell decisions, their only real value comes from acting as an intermediary to setup the coveted 1×1’s at lavish conferences in Miami between the hedge funds who pay them and the management teams of the companies they cover. And, of course, it’s much harder to get those management teams to attend your conference if you spread too much truth about their future potential.
But, for those who still aren’t convinced, the Economist took a look at wall street equity research ratings for the S&P 500 last year and found that just 6% of all ratings were “sell/underperform” ratings.
In December 2016, the Economist conducted a study off all the equity analyst ratings for the 500 or so stocks in the Standard and Poor’s 500 index. The study found that 49 percent of the total ratings on those stocks were “buy/outperform” ratings, 45 percent were “hold/neutral ratings” and only 6 percent of total ratings were “sell/underperform” ratings.
Roughly half of S&P 500 stocks underperformed the overall index in 2016, and about 30 percent of the stocks generated negative overall returns on the year.
All that said, a new A. I. equity analyst created by Wells Fargo doesn’t seem to care one bit about the politics of the equity research business and slapped both Google and Facebook, two cornerstones of Jim Cramer’s beloved FANG stocks, with ‘sell’ ratings. Per Bloomberg:
Late last month, Wells Fargo analyst Ken Sena introduced AIERA, short for artificially intelligent equity research analyst, a bot that does massive automated grunt work to support human analysts as they track stocks and make trade recommendations. And while analysts are known to skew toward buy ratings, the new bot doesn’t seem to share the bias.

This post was published at Zero Hedge on Oct 6, 2017.

Watch Live: Wells Fargo CEO To Apologize (Again) To Congress For Massive Fraud

“One Year Later” is the title of the hearing that Wells Fargo CEO Tim Sloan faces this morning with the Committee on Banking, Housing, & Urban Affairs.
A year after former CEO John Stumpf was grilled by lawmakers over the bank’s massive scandal over fake accounts, Sloan will tell the panel he is ‘deeply sorry’ for the scandal but also that Wells ‘is a better bank today than it was a year ago,’ according to prepared remarks.
‘I apologize for the damage done to all the people who work and bank at this important American institution,’ Mr. Sloan is expected to tell the Senate Banking Committee.
As WSJ reports, regulators last year fined Wells Fargo $185 million for ‘widespread illegal’ sales practices that included opening as many as two million deposit and credit-card accounts without customers’ knowledge.

This post was published at Zero Hedge on Oct 3, 2017.

Georgetown Bank Teller Steals $185,000 From Homeless Customer With Garbage Bag Full Of Cash

Where did all this money come from?
That’s probably the first question that Phelon Davis of District Heights, Maryland, asked himself when a homeless man shuffled into the Wells Fargo branch in Georgetown where Davis worked as a teller three years ago and tried to deposit a garbage bag full of cash.
His next question was probably “do you think he’d notice if some of it went missing?”
Instead of helping the customer deposit the money into his account, Davis instead decided to take advantage of the situation, setting up a fraudulent second account under the customers’ name and eventually stealing more than $185,000 from the man, according to the Washington Post.
The 29-year-old bank teller stole more than $185,000 from a homeless customer who tried to deposit a garbage bag full of cash at a Wells Fargo branch in Georgetown.

This post was published at Zero Hedge on Sep 30, 2017.

Debt-Slave Industry Frets over Impact of Mass Credit Freezes

Their doom-and-gloom scenario: Consumers suddenly becoming prudent. ‘Let’s face it, 143 million frauds won’t be perpetrated right away; it will take some time to filter through,’ Steve Bowman, chief credit and risk officer at GM Financial, the auto-lending subsidiary of General Motors, told Reuters.
He was talking about the consequences of the Equifax hack during which the most crucial personal data, including Social Security numbers, of 143 million American consumers along with equivalent data of Canadian and British consumers, had been stolen. These consumers have all at once become very vulnerable to all kinds of fraud, including identity theft – where a fraudster borrows money in their name.
The day Equifax disclosed the hack, I urged affected consumers to put a credit freeze on their credit data at the three major credit bureaus – Equifax, TransUnion, and Experian – to protect themselves against these frauds. Soon, the largest media outlets and state attorneys general urged consumers to do the same thing. Financial advisors are recommending it. Even Wells Fargo jumped on the credit freeze bandwagon.
As a result, consumers have flooded the websites of the three credit bureaus to request credit freezes in such numbers that the sites slowed down, timed out, or went down entirely for periods of time. This credit freeze frenzy is scaring the credit industry – not just the credit bureaus, but also lenders and companies that rely on easy credit to sell their wares, such as automakers and department stores with instant credit cards.

This post was published at Wolf Street on Sep 30, 2017.

Who Gets Hit by Mortgage Losses in Harvey and Irma Areas?

‘We need to ask for a policy change because the burden with these losses is too big.’ Somebody is going to pay for losses on mortgages of homes that were destroyed by Hurricanes Harvey and Irma. It’s a just a question of who.
The taxpayer is on the hook, along with some investors. But then there are the servicers of mortgages guaranteed by the Government National Mortgage Association, for short Ginnie Mae. The largest of them is Wells Fargo, but they mostly include smaller non-banks such as PennyMac and Quicken Loans. The amounts could be large. And now they’re asking for a bailout of sorts.
In total, 4.3 million properties with nearly $700 billion in outstanding mortgage balances are located in FEMA-designated disaster areas in Texas and Florida, according to a preliminary estimate by Black Knight Financial Services:
Disaster areas of Hurricane Harvey: 1.18 million mortgaged properties with $179 billion in unpaid mortgages. Disaster areas of Hurricane Irma: 3.14 million mortgaged properties with $517 billion in unpaid mortgages. Many of these homes survived mostly unscathed. So the mortgage balances of homes that have been severely damaged or destroyed remain uncertain but are significant.

This post was published at Wolf Street on Sep 19, 2017.

How to Beat Banks at Their Own Game

When it comes to public sentiment, banks and Congress have a lot in common.
People tell pollsters they dislike Congress in general, but they keep re-electing their own representative and senators.
***
Similarly, people tend to like their own bank and disapprove of others, according to the latest American Banker/Reputation Institute survey.
One glaring exception: Wells Fargo (WFC). Pretty much no one likes Wells Fargo since last year’s revelation that the bank’s staff had opened millions of false accounts to meet ambitious sales targets.
I said at the time there’s never just one cockroach. Turn on the lights, and you’ll see more scurrying away.
That proved true for Wells Fargo. It’s now embroiled in several other scandals, like forcing customers to buy car insurance they didn’t need. Other banks may have similar issues.
The banking giants get away with these things because people feel powerless against them, but now there’s a new way to beat the banks at their own game – and keep some of those handsome profits for yourself.

This post was published at Mauldin Economics on SEPTEMBER 19, 2017.

Holy Moly, Now Wells Fargo Recommends a Credit Freeze in Equifax Hack

Third largest US bank reaches out to its customers. A mass credit freeze would have a huge impact.
No one knows yet how the Equifax hack – during which Social Security numbers, birth dates, addresses and, ‘in some instances,’ driver’s license numbers of 143 million consumers had been stolen – will wash out for Equifax, or for the other credit bureaus.
But it increasingly looks like a far bigger and broader mess not only for the credit bureaus but for the overall consumer-based US economy whose grease is easy and often instant consumer credit.
People are trying to put a credit freeze on their data at the three major credit bureaus to protect themselves from identity theft. Victims of identity theft get caught in years of a Kafkaesque nightmare where debt collectors hound them for debts incurred in their name by someone else.
A credit freeze is the best protection against identity theft. It has now been recommended by State Attorneys General, the US Government, the biggest mainstream media outlets, and numerous other outfits including from the first moment on – the evening of September 7 when the hack was disclosed – my humble site. In over 400 comments on my three articles (here, here, and here), readers have shared tips and frustrating experiences trying to deal with overloaded websites that crashed, sent people in wrong directions, or failed in other ways to produce results.

This post was published at Wolf Street on Sep 17, 2017.

Finally the Contrarian Warning from Small Investors

They did the same in January 2000 just before the dot.com crash. For years, individual investors in the US have been a dreary bunch, as stocks soared relentlessly since bottoming out in 2009. But 18 months ago, in February 2016, they finally caught the bug, and now optimism has surged at a record pace. Optimism about the stock market in particular has reached the record highs established during the Dot.com bubble, just before it all fell apart.
The quarterly Wells Fargo/Gallup survey of investors with at least $10,000 in the markets, undertaken in the period between July 28 and August 6 when the Dow Jones Industrial Average was approaching and then exceeded 22,000 (now at 21,798), investor optimism about the stock market did something very special – something it hadn’t done in 17 years:
68% of these investors said they’re optimistic about the stock market’s performance next year. This matches the prior records set in December 1999 and January 2000. Peak optimism occurred two and three months before one of the most epic crashes commenced in March 2000. 25% of the investors said they’re ‘very optimistic,’ an all-time record, besting the prior record of 24% set in the first quarter of this year. This is up from 11% a year ago!

This post was published at Wolf Street on Sep 10, 2017.

Small-Investor Optimism about Stocks Hits Record of Jan 2000 Just Before Dot.com Crash

Contrarian warning, scary thought, or idle amusement at another crazy thing?
For years, individual investors in the US have been a dreary bunch, as stocks soared relentlessly since bottoming out in 2009. But 18 months ago, in February 2016, they finally caught the bug, and now optimism has surged at a record pace. Optimism about the stock market in particular has reached the record highs established during the Dot.com bubble, just before it all fell apart.
The quarterly Wells Fargo/Gallup survey of investors with at least $10,000 in the markets, undertaken in the period between July 28 and August 6 when the Dow Jones Industrial Average was approaching and then exceeded 22,000 (now at 21,798), investor optimism about the stock market did something very special – something it hadn’t done in 17 years:
68% of these investors said they’re optimistic about the stock market’s performance next year. This matches the prior records set in December 1999 and January 2000. Peak optimism occurred two and three months before one of the most epic crashes commenced in March 2000.

This post was published at Wolf Street on Sep 10, 2017.

Wells Admits It Created 1.4 Million More Fake Accounts Than Previously Thought

Remember the outrage one year ago when it was revealed that in its push to pad its top, and bottom line, Warren Buffett’s favorite bank had engaged in outright criminal account churning and “cross selling”, opening some 2.1 million unauthorized client accounts without permission (subsequently this extended to unsolicited car insurance policies extended on Wells auto loans). Well it turns out there was not nearly outrage, because as the bank revealed this morning, the “real” number was higher. 67% higher.
According to the outside review whose findings were released today, Wells Fargo said employees created two-thirds more bogus accounts than initially thought. According to the review, an additional 1.4 million “potentially unauthorized” deposit and credit-card accounts opened when the bank was encouraging employees to sell multiple products to retail customers, bringing the total to about 3.5 million, according to a statement Thursday from the San Francisco-based firm. The revised estimate covers January 2009 to September 2016, almost twice as long as the period examined in the initial review.

Wells new CEO was, predictably, all apologies:

This post was published at Zero Hedge on Aug 31, 2017.

Wells Fargo Increases Fake-Account Estimate 67% to 3.5 Million

O-ho the Wells Fargo Wagon is a-comin’ down the street, creating fake deposit and credit card accounts.
(Bloomberg) – Wells Fargo & Co. said employees created two-thirds more bogus accounts than initially thought, a sign the bank is still struggling to move past a scandal that sparked record fines and congressional investigations.
An outside review found an additional 1.4 million potentially unauthorized deposit and credit-card accounts opened when the bank was encouraging employees to sell multiple products to retail customers, bringing the total to about 3.5 million, according to a statement Thursday from the San Francisco-based firm. The revised estimate covers January 2009 to September 2016, almost twice as long as the period examined in the initial review.

This post was published at Wall Street Examiner on August 31, 2017.

Builders Complain Of Record Labor Shortages: Up To 75% Of Employers Can’t Find Workers

Late last month we reported the remarkable anecdote of an Ohio factory owner who has numerous blue-collar jobs available at her company, but has one major problem: she is struggling to fill positions because so many candidates fail drug tests. Regina Mitchell, co-owner of Warren Fabricating & Machining in Hubbard, Ohio, told The New York Times this week that four out of 10 applicants otherwise qualified to be welders, machinists and crane operators will fail a routine drug test. While not quite as bad as the adverse hit rate hinted at by the Beige Book, this is a stunning number, and one which indicates of major structural changes to the US labor force where addiction and drugs are keeping millions out of gainful (or any, for that matter) employment.
Mitchell said that her requirements for prospective workers were simple: ‘I need employees who are engaged in their work while here, of sound mind and doing the best possible job that they can, keeping their fellow co-workers safe at all times.” And yet, almost nobody could satisfy these very simple requirements.
Whether it was due to pervasive drug abuse, or for some other reason, but fast forward two weeks when in response to a special question in the July NAHB/Wells Fargo Housing Market Index (HMI) survey, US homebuilders said that labor and subcontractor shortages have become even more widespread in July of 2017 than they were in June of 2016.
This is a concern as the inventory of for-sale homes recently struck a 20-year low. And while economists and the public cry for more inventory, many builders are pressed to meet demand. A labor and subcontractor shortage in the building industry has worsened over the past year, according to the National Association of Home Builders/Wells Fargo Housing Market Index survey of single-family builders. The July 2017 HMI survey asked builders about shortages in 15 specific occupations that were either recommended by Home Builders Institute (NAHB’s workforce development arm) or that NAHB found to be particularly significant when tabulating Bureau of Labor Statistics data for a recent article on Young Adults & the Construction Trades. Shortages (either serious or some) were at least fairly widespread for each of the 15 occupations, ranging from a low of 43 percent for building maintenance managers to a high of around 75 percent for the three categories of carpenters (rough, finished and framing).

This post was published at Zero Hedge on Aug 20, 2017.

Wells Chairman Out Following “Unbelievable, Outrageous” Scandal

Two weeks after the latest consumer scandal involving Warren Buffett’s favorite bank, Wells Fargo, broke when the NYT reported that as many as 800,000 people who took out car loans from Wells were also charged for auto insurance they did not need, with many of them still paying for it, while some were forced to default as a result of this obligations, and just days after the NYC Comtroller Scott Stringer, said that what happened at Wells Fargo is an “unbelievable, outrageous, full-blown scandal“…
This is a full-blown scandal – again. It’s unbelievable, outrageous, sad, and yet quintessential Wells Fargo. This isn’t just a corporate debacle. It’s caused real human harm. It’s reflective of a system that Americans feel is rigged against the little guy, and sadly symbolic of a culture that puts short-term profits ahead of creating sustainable value for shareowners. Everyday families have suffered and tens of millions of hard-earned dollars were stripped from unsuspecting Americans, many of whom are struggling just to get by. In the end, shareowners ultimately suffer the long-term consequnces.

This post was published at Zero Hedge on Aug 10, 2017.