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Wells Fargo Account Closures


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On 6/23/2021 at 2:09 PM, PotO said:

 

Wells Fartgo is closing all Line of Credit accounts on August 23rd...

 

 

CNBC is headlining this today prominently on their website. It will be interesting to see what other outlets report on it (WSJ?). I wonder if more negative publicity for WF might mean their closure decision will have larger implications than they intended. 

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Wells Fartgo is closing all Line of Credit accounts on August 23rd.   They say its to allow them to focus on other more important things. Such as not offering some of the suckiest credit cards

From the article it looks like they will, but you probably got to ask.   "The bank has decided to keep the products available for those who actively used them or want to reactivate old ones,

Regarding #3, I called yesterday to proactively close my WF LOC to avoid the "Closed by Credit Grantor" and they told me that they had already decided not to report it that way to the CRAs. Not that

"Wells Fargo CEO Charles Scharf has been forced to make difficult decisions during the coronavirus pandemic, offloading assets and deposits and stepping back from some products because of limitations imposed by the Federal Reserve. In 2018, the Fed barred Wells Fargo from growing its balance sheet until it fixes compliance shortcomings revealed by the bank’s fake accounts scandal."

 

Makes me wonder how many of the PLOC's were involved as part and parcel of the fake accounts scam...or, alternately, how many of the ~$26B described as outstanding are being defaulted upon as people sit at home. 

 

How long before we see the stagecoach gobbled up by someone else in the financial sector?

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"Wells Fargo CEO Charles Scharf has been forced to make difficult decisions during the coronavirus pandemic, offloading assets and deposits and stepping back from some products because of limitations imposed by the Federal Reserve. In 2018, the Fed barred Wells Fargo from growing its balance sheet until it fixes compliance shortcomings revealed by the bank’s fake accounts scandal."
 
Makes me wonder how many of the PLOC's were involved as part and parcel of the fake accounts scam...or, alternately, how many of the ~$26B described as outstanding are being defaulted upon as people sit at home. 
 
How long before we see the stagecoach gobbled up by someone else in the financial sector?

I can see it now ...

The old hags at Stinkrony buying Wells Fartgo. Farto Stinkrony. I wouldn't be a big surprise.
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Can't think of an American company capable of an acquisition like that that wouldn't be barred from it.  So if it does happen I could see HSBC, Barclay's, and Manulife as potential players.

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Getting a lot of coverage along the lines of how can WF not only do this but damage credit scores as if they had any control over it.  Very weird. Elizabeth Warren says WF needs to make it right. Sure, it's not fair but WF has no control over CRAs and FICO scores. And, knowing her background, she well knows that. So what does she think WF could possibly do? They are pretty much forced into closing all of these because they are under strict capital controls from prior misbehavior.

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8 hours ago, cashnocredit said:

Getting a lot of coverage along the lines of how can WF not only do this but damage credit scores as if they had any control over it.  Very weird. Elizabeth Warren says WF needs to make it right. Sure, it's not fair but WF has no control over CRAs and FICO scores. And, knowing her background, she well knows that. So what does she think WF could possibly do? They are pretty much forced into closing all of these because they are under strict capital controls from prior misbehavior.

 

IMHO, Wells Fargo had a lot of options. This includes:

  1. The option to convert the PLOC ( in good standing) to a credit card or an installment loan product.
  2. Sell the PLOC portfolio.
  3. Not to report to the CRA as "Closed by the Credit Grantor) not that the remark has any impact on score.
  4. Give more time so that the customer has time to make other arrangements.
  5. Look at other areas of their balance sheet to reduce their liability.
     
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4 hours ago, dvd said:

 

IMHO, Wells Fargo had a lot of options. This includes:

  1. The option to convert the PLOC ( in good standing) to a credit card or an installment loan product.
  2. Sell the PLOC portfolio.
  3. Not to report to the CRA as "Closed by the Credit Grantor) not that the remark has any impact on score.
  4. Give more time so that the customer has time to make other arrangements.
  5. Look at other areas of their balance sheet to reduce their liability.
     

#1:  Converting to an installment loan showing initial LOC as the starting point would be good but it wouldn't be accurate. It was never an installment loan and calling it one now doesn't turn it into one. And if a debtor defaulted they could use the error to prevent/remove adverse reporting. As for CCs, if they can't justify the terms of a PLOC, CCs are even worse. Possibly they could offer a CC  conversion with a higher interest rate which might make it feasible. Lots of interesting biz. issues. Would be fun to be a fly on the wall when they went over all the options other than closing the PLOCs.

 

#2. It likely can't be sold. Costs money to transfer a fin asset and there has to be a good reason why the buyer could make it more productive than the seller had made it. Don't see any way to make that happen here. So it's market value is most likely negative.

 

#3. Yeah. The should do that. Again, they can't lie at risk of being unable to post a default in the future but they could easily tell the consumer explicitly they could request up to the closure date and get it to report "closed by consumer"

 

#4. Agree here also. 60 days is a slightly short time to make other PLOC arrangements or transfer the debt somewhere else like someone else's CC. Should have given 180 days. They have known for a long time.

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5 hours ago, cashnocredit said:

#1:  Converting to an installment loan showing initial LOC as the starting point would be good but it wouldn't be accurate. It was never an installment loan and calling it one now doesn't turn it into one. And if a debtor defaulted they could use the error to prevent/remove adverse reporting. As for CCs, if they can't justify the terms of a PLOC, CCs are even worse. Possibly they could offer a CC  conversion with a higher interest rate which might make it feasible. Lots of interesting biz. issues. Would be fun to be a fly on the wall when they went over all the options other than closing the PLOCs.

 

#2. It likely can't be sold. Costs money to transfer a fin asset and there has to be a good reason why the buyer could make it more productive than the seller had made it. Don't see any way to make that happen here. So it's market value is most likely negative.

 

#3. Yeah. The should do that. Again, they can't lie at risk of being unable to post a default in the future but they could easily tell the consumer explicitly they could request up to the closure date and get it to report "closed by consumer"

 

#4. Agree here also. 60 days is a slightly short time to make other PLOC arrangements or transfer the debt somewhere else like someone else's CC. Should have given 180 days. They have known for a long time.

 

What I meant by converting was to offer a term loan. If accepted the PLOC balance would be transferred to the loan. It would be a new account but the impact could gain the customer a few points.

You can offer to convert to a credit card at either the same APR or the same APR on the remaining balance and a new APR for new charges.


Bottom line is that Wells should have though come up with a better plan. Separate the customers in default and the ones in good standing, which I dont think they did from the start. I dont think they give a s**t. 
 

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5 hours ago, dvd said:

 

What I meant by converting was to offer a term loan. If accepted the PLOC balance would be transferred to the loan. It would be a new account but the impact could gain the customer a few points.

You can offer to convert to a credit card at either the same APR or the same APR on the remaining balance and a new APR for new charges.


Bottom line is that Wells should have though come up with a better plan. Separate the customers in default and the ones in good standing, which I dont think they did from the start. I dont think they give a s**t. 
 

Yeah. Good ideas. While WF couldn't automatically do either, they could make the offer. If the consumer accepted, their scores would not be impacted as much or could even be positive depending on the balances and LOC involved. The CC conversion might still have the bank on the hook for capital reserve requirements as it's credit risk so that may/or may not be viable. Need a banker to chime in.

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4 hours ago, cashnocredit said:

Yeah. Good ideas. While WF couldn't automatically do either, they could make the offer. If the consumer accepted, their scores would not be impacted as much or could even be positive depending on the balances and LOC involved. The CC conversion might still have the bank on the hook for capital reserve requirements as it's credit risk so that may/or may not be viable. Need a banker to chime in.

 

To the best of my understanding, WF move to close these accounts is directly tied to the harsh slap on the hand WF received from the Fed in response to the fake account scandal.  The Fed essentially capped the total assets that WF could put on its books to approximately the amount in place as of 2019.

 

"Assets" in this case means loan receivables.  So, at a time when other banks have resumed pushing profitable lines such as credit cards and significantly expanding their accounts, with appreciable additional profit flowing to the bottom line, WF finds itself collared.  It's simply not permitted to grow it's outstanding loan portfolio.

 

WF's best recourse is to reduce (or even shrink) it's underwriting in more thinly profitable lines of business (such as HELOC's and personal LOC's) so that they create the capacity to increase the more profitable credit card offerings.

 

In a nutshell, that's what I believe is at work here.  Consequently, there isn't any type of restructuring of the personal LOC assets that would satisfy WF's likely objective of boosting credit card issuance.

 

That having been said, I'm stunned that the PLOC portfolio wouldn't draw acquisition interest from another lender.  There has to be some price at which the deal would be attractive to both parties, considering that the alternative is that WF generates no income whatsoever from dropping the product.  Of course, that begs speculation (previously voiced above) that the portfolio is possibly to muddied through acts related to the fake account scandal ... and of a complexity that WF sees no ready means by which to clean things up to make the portfolio acceptable. 

 

We this last speculation fact, it gives credance to the idea that things are truly FUBAR at WF (something many here have a conviction about) and the Fed likely would have loved to shut WF down altogether were it not for the debacle that would need to be mopped up.

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Can't think of an American company capable of an acquisition like that that wouldn't be barred from it.  So if it does happen I could see HSBC, Barclay's, and Manulife as potential players.

We can remove HSBC from the list. They are, for not the first time, abandoning retail banking in the US for all but those with a $75,000+ average daily balance.
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IMHO, Wells Fargo had a lot of options. This includes:
  1. The option to convert the PLOC ( in good standing) to a credit card or an installment loan product.
  2. Sell the PLOC portfolio.
  3. Not to report to the CRA as "Closed by the Credit Grantor) not that the remark has any impact on score.
  4. Give more time so that the customer has time to make other arrangements.
  5. Look at other areas of their balance sheet to reduce their liability.
     


1. I would love to take that LOC limit and move it my CC. I haven't explored doing that yet, but I imagine it will not be possible.

3. Unless you have a balance on the LOC, you can easily avoid the "closed by credit grantor" remarks by closing the LOC yourself prior to their stated closure date.

4. 60 days is enough time to search for another LOC product. Those with an outstanding balance can continue to pay it off as normal. They do not have to clear the debt before the LOC closes.

I believe [mention]hdporter [/mention]has provided an accurate analysis of why this is happening. I do not think WF is making this move because of pure profitability issues.

Still, I'm angry that WF is doing this. It drops me from $2.19m to $2.18m and my wife reminds me every day that 18 means "go to hell". I will have to app for whatever crap catches my eye just to make up for that loss. Any suggestions [mention]hegemony [/mention]?
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:dntknw:  
 
 

In Chinese, the number 18 is pronounced, they claim, similar to the phrase "go to hell". Its the first I heard about that one.

The number 4 is pronounced similar to the word "die".

When you are buying a condo, the vast majority of the people will not want to buy a unit on the 4th, 14th, 24th or 18th floor. Some won't buy on 13th either. It's not uncommon in many buildings to see floors numbered like this: 1, 2, 3, 5, ... 12, 15 ... 23, 25 ... .
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So glad I completely dumped WF for NFCU

I would hardly think Wells Fargo evil just because they decided to close a certain product line. Banks do this all the time, even with credit cards. It's to be expected and that's why smart people here have a well diversified credit portfolio.

I like WF and I also like Navy, but for entirely different reasons.
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4 hours ago, PotO said:


In Chinese, the number 18 is pronounced, they claim, similar to the phrase "go to hell". Its the first I heard about that one.

The number 4 is pronounced similar to the word "die".

When you are buying a condo, the vast majority of the people will not want to buy a unit on the 4th, 14th, 24th or 18th floor. Some won't buy on 13th either. It's not uncommon in many buildings to see floors numbered like this: 1, 2, 3, 5, ... 12, 15 ... 23, 25 ... .

My late mother worked in the Centre City Bldg built in the early 1900's in downtown San Diego. In its hay day it was the tallest high rise. It had 14 floors but the elevator would not take you to the 13th floor.

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4 hours ago, StarkRaven$ said:

My late mother worked in the Centre City Bldg built in the early 1900's in downtown San Diego. In its hay day it was the tallest high rise. It had 14 floors but the elevator would not take you to the 13th floor.

There are MANY buildings that don't have an official '13th floor' even though, umm...yeah, there isn't a floor of dead space...

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5 hours ago, StarkRaven$ said:

My late mother worked in the Centre City Bldg built in the early 1900's in downtown San Diego. In its hay day it was the tallest high rise. It had 14 floors but the elevator would not take you to the 13th floor.

Had a great restroom on the 13th floor fully accessible by taking the stairs. Privacy baby. 😉

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On 7/16/2021 at 6:20 AM, PotO said:


I would hardly think Wells Fargo evil just because they decided to close a certain product line. Banks do this all the time, even with credit cards. It's to be expected and that's why smart people here have a well diversified credit portfolio.

I like WF and I also like Navy, but for entirely different reasons.

From experience, I've never had it happen. Also haven't known anyone it's happened to with the exception of synchrony for non usage. Not saying it hasn't just not in my circle. 

Edited by schizcat
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Some close sooner than others. And some are just inexplicable.

 

I got a Discover card back in the 80's at Sears. It would expire every now and then and they would mail a new one. Eventually they didn't automatically renew it sometime in the early 2000's.

 

No surprise, right?  Except that I never used the card at all. They just kept sending me new ones.

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So glad I completely dumped WF for NFCU

I'm glad you did, too. The money they set aside for your credit limit is probably what they gave to me.
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From experience, I've never had it happen. Also haven't known anyone it's happened to with the exception of synchrony for non usage. Not saying it hasn't just not in my circle. 

That happens often when people have an exceptionally limited credit experience.

Blispay closed a while back and left people stranded. HSBC has done it and is planning on doing it yet again. Home Credit has done it with the Sprint credit card. There are more than one credit union that has left people high and dry.

Synchrony has eliminated cards from their portfolio and simply left the cardholders stranded. They just eliminated the Marvel credit card from their portfolio closing all accounts and leaving cardholders up the creek.
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Can't think of an American company capable of an acquisition like that that wouldn't be barred from it.  So if it does happen I could see HSBC, Barclay's, and Manulife as potential players.

HSBC would be impossible.

HSBC has recently announced they are -- yet again -- leaving the retail banking business in the US for all but Premier customers.
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