Weekly 10-Q: Wells Fargo is rolling back its mortgage business
- Once the country's third largest mortgage lender, Wells Fargo is taking a backseat from the mortgage market limelight.
- In other news, as there appears to be no silver lining for the crypto market currently, Coinbase is eyeing to enter the European market to regain revenues while laying off 20% of its global workforce.
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Wells Fargo is rolling back its mortgage business
Once the country's third largest mortgage lender, Wells Fargo is taking a backseat from the mortgage market limelight.
The bank disclosed its plan to narrow down its mortgage services only to its existing customers and those in minority communities. Furthermore, the firm is eyeing to strengthen its core business wings, namely; investment banking and unsecured lending like credit cards, and seek the same prize as its Wall Street rivals -- Bank of America and JPMorgan Chase.
Both these banks ceased their mortgage services after the 2008 financial crisis. Other banks have been disengaging from the mortgage business as well, leaving a majority share of home loans with nonbank lenders like Rocket Mortgage, LoanDepot.com, Guaranteed Rate, and others.
The move comes as Wells Fargo's reputation continues to deteriorate due to the series of fines imposed by regulators. As recent as last month, the Consumer Financial Protection Bureau penalized the bank with a fine of $1.7 billion for widespread mismanagement over multiple years that harmed 16 million customer accounts.
The withdrawal can bring about a new round of employee layoffs constituting the mortgage sector but no statement has been released by the bank in this regard.
Top stories of the week
Amazon seller lending volume to nearly double in 2023
According to a leaked internal document, Amazon economists expect its seller lending volume to approximately double this year. Amazon's lending business has rebounded in recent years after scaling back during COVID -- however, it is planning to tighten the underwriting and credit management policies as repayment rates are expected to drop, considering the continuing macroeconomic winds in 2023. Furthermore, the company economists are forecasting that third-party sellers will owe it over $2 billion over the next year. (Business Insider)
CFPB recommends credit bureaus give consumers more control over their data
The Consumer Financial Protection Bureau released an annual report that details improvements and deficiencies in Equifax, Experian, and TransUnion's responses to consumer complaints transmitted by the CFPB. The report is based on the 488,000 consumer complaints from October 2021 through September 2022. The CFPB expects the three nationwide consumer reporting companies to continue improving how they serve consumers by; considering consumer burden when implementing automated processes, recognizing that technology is also improving for consumers, and considering how to transition the market from control and surveillance to consumer participation. (PYMNTS)
It's becoming a do-or-die situation for Coinbase
Coinbase is ready to cut 950 jobs, about 20% of its global workforce as part of a restructuring plan. This is the third round of layoffs in a year after cutting a fifth of its workforce following an 18% staff reduction in June. The move follows the significant collapse in the value of cryptocurrency and the continuing macro headwinds. Moreover, as there appears to be no silver lining for the crypto market currently, Coinbase is eyeing to enter the European market to regain revenues as the trading activity takes a back seat in its home market. (CoinDesk)
New Year brings a new round of layoffs at Goldman Sachs
As a cost-cutting measure, Goldman Sachs is embarking on one of its biggest rounds of job cuts, planning to let go of roughly 3,200 positions this week -- more than a third of these layoffs constitute its core trading and banking units. In the previous months, the bank had ended free daily cab rides for commuting and other perks such as cutting back on free breakfast, lunches, and coffee for employees. (FT)
JPMorgan claims the college-lending fintech deal was a fraud
Charlie Javice, founder of Frank, a college funding website, is being sued by JPMorgan Chase for allegedly lying about the number of customers signed up to her site -- before it was acquired for $175 million by the bank in 2021. The suit alleges that Javice and another executive at Frank, Olivier Amar, hired a data scientist who was paid $18,000 to fabricate a list of fake names and addresses that were passed off as customers. Days after JPMorgan filed its lawsuit, Javice countersued -- alleging that she was fired by the bank from her role as head of student solutions in November and claimed that the bank owed her $20 million in legal expenses that accumulated as a result of an internal investigation from last spring. (Bloomberg)
LendingClub plans to layoff 225 employees
LendingClub is reducing its headcount by 14%, nearly 225 workers. The company’s workforce was over 1,300 at the end of 2021. The move comes as a measure by the firm to align its expense structure to loan volume and revenue, while strategizing its long-term vision. The company expects that the layoffs will bring about $25-30 million in annualized run-rate savings during the year. Additionally, the company put forth its preliminary fourth-quarter results, including expectations of a $260-263 million range for revenue and a $21-24 million range for net income. After hours on Thursday, the company’s stock rose about 5%. (Reuters)
Robinhood Retirement is now live
Robinhood Retirement is now available to all eligible customers, which launched via the waitlist in December. Around more than 1 million people were on the retirement program waitlist. It is the first and only Individual Retirement Arrangement (IRA) to offer a 1% match for every eligible dollar contributed and earnings can grow either tax-free or tax-deferred. A majority of the signed-up users belong to the gig economy from the likes of DoorDash and Uber, identify as self-employed, or are considering to start saving beyond their offered wages. (Finextra)
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Top 10 biggest US banks by assets in 2023, according to the Federal Reserve
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