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Wells Fargo cuts more jobs in the Des Moines metro in the 10th round of layoffs

By Nagasunder in US business news, posted September 26, 2022

Struggling banking giant Wells Fargo & Co has cut more jobs in central Iowa.

According to a notice filed with Iowa Workforce Development, the banking giant laid off another 36 workers on Thursday, September 22, marking the 10th round of layoffs since April.

Wells Fargo, the Des Moines metro's largest private employer, has been laying off workers due to a slowdown in its Iowa-based home mortgage division.

According to state filings, the latest layoffs bring the total number of affected local workers to 402 since April.

The layoffs also come three weeks before Wells Fargo shares its next quarterly report.

Spokesperson Kevin Friedlander said: "We regularly review and adjust staffing levels to align with market conditions and the needs of our businesses.

"We work hard to identify opportunities for employees in other parts of the company so we can retain as many employees as possible. Where it’s not possible, we provide assistance, such as severance and career counseling."

The company's spokespeople have previously laid the blame on a decline in the home lending industry this year.

The Mortgage Bankers Association predicted on Monday, September 19 that 6.6 million mortgages would be obtained by Americans this year, a 51 percent decrease from 2021.

The trade association anticipates a further decline in new loans next year, to 6 million.

According to the U.S. Census Bureau, new home and apartment construction fell nationwide in the spring and early summer.

August saw a reversal in the trend, with new multi-family housing accounting for the majority of the growth.

Through the first half of this year, Wells Fargo reported home mortgage revenue of $2.46 billion, a 43 percent decrease from 2021.

Over that time, net income decreased 36 percent to $6.79 billion.

The bank's revenue from home lending has decreased this year after taking off in the summer of 2020 and remaining above pre-pandemic levels for the majority of 2021.

As the Federal Reserve's Open Markets Committee tried to slow the country's historically high inflation rate by raising borrowing costs, the mortgage industry has struggled.

In order to combat inflation, the Fed increased interest rates by 0.75 percentage points on Wednesday, indicating that its board of governors believes doing so will cause the nation to enter a recession.

The rate increases will "very likely" result in job losses, according to Federal Reserve Chair Jerome Powell, who made the statement during a news conference on Wednesday.

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At this week's hearings of the House and Senate committees on banking, lawmakers questioned Wells Fargo CEO, Charlie Scharf.

Sen. Sherrod Brown asked Scharf if the bank was "too broken to fix,"

Brown cited a range of scandals, from an investigation into the bank's practice of creating fake accounts in customers' names to a recent Bloomberg report alleging racial discrimination in Wells Fargo's home lending evaluations.

"I'm very confident that we have made changes which will enable us to put all of our historical problems behind us," Scharf said during Thursday's hearing.

"We have a new management team. We've changed our processes."

On Friday in the afternoon, Wells Fargo stock was trading at $39.92, down 8 percent from the previous week and 21 percent from the previous year.

In central Iowa, the bank employs about 13,000 people, according to the most recent data provided by the business.

Source: Desmoines register

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