Wells Fargo lays off more Des Moines workers in the 10th round of cuts


Wells Fargo & Co. cut more jobs in central Iowa this week.

The banking giant laid off another 36 employees Thursday in its 10th round of cuts since April, according to a memo filed with Iowa Workforce Development. Wells Fargo, the largest private employer in the Des Moines metro area, has laid off workers amid a slowdown at its Iowa-based mortgage division.

The latest cuts bring the total number of affected local workers to 402 since April, according to state filings. The layoffs also come three weeks before Wells Fargo releases its next quarterly report.

“We regularly review and adjust headcount based on market conditions and the needs of our businesses,” spokesman Kevin Friedlander said in a statement on Friday. “We are working hard to identify opportunities for employees in other parts of the company so that we can retain as many employees as possible. Where this is not possible, we offer support, e.g. B. severance and career advice.”

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Why is Wells Fargo laying off employees?

Company spokesmen have previously blamed a decline in home loan business this year. The Mortgage Bankers Association forecast Monday that U.S. borrowers would take out 6.6 million mortgages this year, down 51% from 2021. The trade group expects the number of new loans to fall further to 6 million next year.

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Construction of new homes and apartments slowed nationwide this spring and early summer, according to the US Census Bureau. In August, the trend reversed, with most of the growth coming from new apartment buildings.

At Wells Fargo, the bank has recorded $2.46 billion in mortgage loan income for the first six months of this year, down 43% from 2021. Net income is down 36% to $6.79 billion over the period.

Chief Financial Officer Mike Santomassimo signaled workers could lose their jobs during a call with analysts in July.

“It’s possible that we may have another decline in mortgage bank earnings in the third quarter,” he said. “We are making adjustments to reduce spending in response to lower sourcing volumes and we expect these adjustments to continue over the next few quarters.”

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The mortgage business has struggled as the Federal Reserve’s Open Markets Committee has sought to slow decades of high inflation by raising borrowing costs across the country. The Fed hiked rates by 0.75 percentage point on Wednesday, signaling that its board of governors believes it will push the country into recession to curb inflation.

As a result, the average 30-year fixed-rate mortgage hit 6.3% on Thursday, the highest cost of borrowing since November 2008.

According to Politico, Federal Reserve Chair Jerome Powell said during a news conference on Wednesday that the rate hikes will “very likely” cost people their jobs.

“These are the unfortunate costs of reducing inflation,” he said. “But a failure to restore price stability would mean far greater pain.”

The CEO of Wells Fargo appears before the US House and Senate committees

Meanwhile, lawmakers grilled Wells Fargo CEO Charlie Scharf during the House and Senate Committee hearings with bank leaders this week. Sen. Sherrod Brown asked Scharf if the bank was “too broken to fix,” according to the Charlotte Observer.

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Brown cited a series of scandals, from an investigation into the bank’s practice of creating fake accounts on behalf of customers to a recent Bloomberg report alleging racial discrimination in Wells Fargo’s home loan ratings.

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“I’m very confident that we’ve made changes that will allow us to put all of our historical problems behind us,” Scharf said during Thursday’s hearing. “We have a new management team. We have changed our processes.”

Wells Fargo shares traded at $39.92 as of Friday afternoon, down 8% on the week and 21% for the year. The bank employs about 13,000 people in central Iowa, according to the company’s latest figures.

Tyler Jett covers jobs and the economy for the Des Moines Register. You can reach him at [email protected], 515-284-8215 or on Twitter at @LetsJett.

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