Because of the combined effects of subprime mortgage losses and merging with Wachovia, Wells Fargo has decided to close down the Finance Division. Only about 3,800 of the 14,000 jobs in the Finance Division will be lost. Line of credit loans and other financial products will nevertheless be offered by Wells Fargo, but within the bank branches.
The Wells Fargo Finance Division’s work
In existence for the last 100 years, the Wells Fargo Finance Division has been separate from Wells Fargo banking services. The Finance Division has been responsible for providing small loans, large loans, auto financing and mortgages. Only $ 1.5 billion of the $ 24.7 billion in real estate loans held by the finance division are considered prime. The Finance Division lost almost 5 percent of its value, which is about the exact same as other lenders.
Wachovia purchased by Wells Fargo
In 2008, Wells Fargo started a merger with smaller lender Wachovia Bank. This added branches for the conglomerate bank but additionally brought on additional liabilities. You will find about 8,800 total branches between Wells Fargo, Wells Fargo Home Mortgage, and Wachovia. In order to prevent Wachovia from failing, Wells Fargo took over the bank on government regulator’s request. On March 20, 2010, Wachovia was officially dissolved as a bank.
Continued lending at Wells Fargo
Customers who are borrowing money will still be able to approach Wells Fargo for help. Auto loans and fast personal loans will now be offered inside Wells Fargo branches. The Wells Fargo mortgage loan business is going to be focusing more on loans backed by the Federal Housing Administration. Loans are less likely to default back to the bank when they’re supported by the federal government. Wells Fargo will continue to service unsecured personal loans and auto loans.
