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Wells Fargo is still in turmoil

October 14, 2020. Summarized by summa-bot.

Pedestrians wearing protective masks walk past a Wells Fargo & Co. branch bank in New York, U.S., on Thursday, July 9, 2020. Wells Fargo is scheduled to release earnings figures on July 14. Photographer: Peter Foley/Bloomberg

The Wells Fargo stagecoach is still broken.

Wells Fargo's profit drop was driven in part by continued fallout from the bank's various scandals.

While all banks are grappling with historically low interest rates, Wells Fargo can't offset that pain by aggressively lending -- because of sanctions from the Fed that prevent it from growing its balance sheet.

"One obvious difference is that we won't be expanding the size of our balance sheet for any reason because we're operating with an asset cap," Wells Fargo chief financial officer John Shrewsberry told reporters during a conference call.

Another difference is that Wells Fargo doesn't have the same presence in booming Wall Street businesses that other big banks do.

Job cuts at Wells Fargo

Wells Fargo also continues to grapple with far higher expenses than its rivals.

Shrewsberry, who is retiring this fall after 22 years at Wells Fargo, said that a "big piece" of the bank's cost-cutting plans will come from layoffs and natural attrition.

Even though Wells Fargo's serious legal troubles began four years ago with the fake-accounts scandal, the bank continues to struggle to turn the page.

Yet Wells Fargo reported another $961 million of "customer remediation" during the third quarter "for a variety of matters. "

He explained that Wells Fargo realized it needed to make further refunds as new business leaders expanded the number of customers and time period it was evaluating.

The bank's credit metrics also improved: Wells Fargo set aside $769 million to cushion the blow from bad loans, which is down sharply from the $9. 5 billion it set aside during the second quarter.

Still, Wells Fargo's results provide yet more evidence of how it has become the nation's weakest big bank.

Last quarter, Wells Fargo was the only one to lose money, its first loss since the 2008 financial crisis.

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