Because of the combined effects of subprime mortgage losses and merging with Wachovia, Wells Fargo has decided to close down the Finance Division. This move will chop about 3,800 jobs from the 14,000 person division. Line of credit loans and other financial products will nevertheless be offered by Wells Fargo, but within the bank branches.
Wells Fargo Finance Division
Open for over 100 years, Wells Fargo Finance has operated separately from Wells Fargo Banking. The Finance Division of Wells Fargo underwrites small loans, auto loans for bad credit, mortgages, and other varieties of financing. With $ 24.7 billion in real estate loans in the Wells Fargo Finance Division, only $ 1.5 billion of them are “prime”. On-level with other lenders, the Wells Fargo Finance Division only lost about 4.6 percent of value within the last quarter.
Wells Fargo takes over Wachovia
In 2008, Wells Fargo started a merger with smaller lender Wachovia Bank. Wells Fargo brought in liabilities also as branches. There are about 6,600 branches of Wells Fargo/Wachovia banks and an additional 2,200 Wells Fargo Home Mortgage offices. The takeover of Wachovia was forced by government regulators, who wanted to ensure that Wachovia bank would not fail. As a separate entity, Wachovia was dissolved in March of 2010.
Lending at Wells Fargo will continue
Though Wells Fargo is shutting down its Finance Division, it has announced the bank will still provide services for customers who are borrowing money. Inside Wells Fargo branches, fast personnel loans and auto loans will still be offered as part of the banking products. Rather than offering subprime mortgages, Wells Fargo intends to focus on offering Federal Housing Administration loans. In theory, FHA loans are less likely to default. Wells Fargo will continue to service unsecured personal loans and auto loans.
