Wells Fargo to shut down Finance Division

After acquiring Wachovia Bank and taking heavy losses from subprime mortgages, Wells Fargo has announced that it could be shutting down its Finance Division. Wells Fargo plans on chopping 3,800 jobs from the Finance Division as part of the sizing-down. Wells Fargo will still offer line-of-credit loans and other financial products — just not through a separate division.

Source for this article: Wells Fargo to shut down Finance Division by Personal Money Store

What the Finance Division does

Wells Fargo Banking and Wells Fargo Financial have been two separate divisions for over 100 years. The Finance Division has been responsible for providing small loans, large loans, auto financing and mortgages. The Finance Division currently holds about $ 24.7 billion in real estate loans, and all but $ 1.5 billion is considered subprime. The division lost about 4.62 percent of value in the first quarter, which is about on-level with other major lenders.

The Wells Fargo merger with Wachovia

In 2008, Wells Fargo started a federally-pushed merger with Wachovia. Wells Fargo brought in liabilities also as branches. Considering that Wells Fargo and Wells Fargo Home Mortgage have a combined 8,800 branches, it’s not a surprise that there are “too many”. The takeover of Wachovia was forced by government regulators, who wanted to ensure that Wachovia bank would not fail. Formally, Wachovia was dissolved on March 20, 2010.

Lending at Wells Fargo will continue

Customers who are borrowing money will still be able to approach Wells Fargo for help. Inside Wells Fargo branches, fast personal cash loan and automobile loan will nevertheless be offered as a part of the banking products. 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 are supported by the federal government. The current $ 14.7 billion in auto loans and $ 7.6 billion in quick unsecured loans will continue to be serviced by the business.