Three Wells Fargo Financial stores in Spokane and one in Coeur d’Alene will close in September as part of a Wells Fargo & Co. restructuring.
The company is closing all 638 of its financial stores and ending the origination of non-prime mortgage loans that it keeps in its portfolio.
Wells Fargo said it will eliminate 2,800 of 14,000 Wells Fargo Financial jobs in the next 60 days. Another 1,000 likely will be lost in the next 12 months. Remaining employees will be reassigned to other Wells businesses.
The San Francisco-based bank said it no longer needed the locations because it now has 6,600 bank branches and 2,200 mortgage offices nationwide after buying Charlotte’s Wachovia Corp. in 2008. It said less than 2 percent of its real estate loans were originated through Wells Fargo Financial stores in the first quarter of 2010.
The job cuts equate to 1.4 percent of Wells Fargo’s 267,400 employees at the end of March.
Local Wells Fargo Financial offices are located at 1419 N. Argonne Road in Spokane Valley, 7450 N. Division St. in north Spokane, 3209 E. 57th Ave. in south Spokane, and 411 West Haycraft Ave. in Coeur d’Alene.
Wells Fargo said the restructuring would not affect existing bank branches or mortgage offices. Customers with current Wells Fargo Financial loans will continue to be served without disruption, the bank said. Federal Housing Administration loans, auto loans and credit cards previously offered by Wells Fargo Financial will be combined with similar products offered elsewhere in the company.
Analyst Nancy Bush of NAB Research said the move is partly driven by economics: There’s no need for so many Wells Fargo Financial stores when they can be easily absorbed by the branch network. The subtext, she said, is that the bank is getting ahead of the curve on what the new Consumer Financial Protection Agency will require.
“Non-prime products are going to be in the bull’s-eye of the target of the CFPA,” Bush said.
“It’s like people woke up and said, ‘There’s life after (the new financial regulations),’ and for some of these companies, it’s going to be a great life, and Wells Fargo is one of them,” Bush said.
In an interview with McClatchy Newspapers last year, Wells Fargo Chief Executive Officer John Stumpf said that the subprime loans made by Wells Fargo Financial were “a very different kind of subprime loan” and were “performing very, very well.” He described them as primarily a “debt consolidation product.”
“The customer already owns her home, but she might have a lot of credit card debt, a debt on an auto, a debt with a hospital. We would consolidate all that debt and put it on her house. That’s the kind of subprime loans we put on the books. … They are fully underwritten, there’s no broker involved, full appraisals, full income verification.”
Matthew Lee, executive director of the New York watchdog group Inner City Press/Fair Finance Watch, said he remained concerned about Wells Fargo’s role in making other subprime mortgages.
“Wells Fargo stayed in standalone subprime storefronts as long as they could. Even now that they shutter some of the storefronts, they are only stopping subprime mortgage loans for their own portfolio,” Lee said. “They will still make subprime loans and sell them to others, which is the kind of subprime lending with the least amount of safeguards.”