Wells Fargo CEO Charlie Scharf, pictured here in October 2021, has set out to revamp the bank's sprawling wealth management arm.PATRICK T. FALLON/AFP via Getty Images
Hi, Aaron Weinman here. Let's talk about Wells Fargo, and specifically, its mortgage-lending business — long a profit center for the bank.
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But before I kick that off, a bit on old mate and Fed Chair Jay Powell, who appeared in front of the Senate Banking Committee on Wednesday (and will appear before the House Financial Services Committee today). One can't really talk about mortgages without linking to Powell's quest to hike rates.
Interest-rate hikes are one of the Fed's go-to tools to fight inflation. But Powell said that increased rates won't provide the quick relief we'd hoped for, especially when it comes to food and gas prices. The Fed's mission to cool the economy also translates to pricier home loans, a key factor in Wells' decision to resize its mortgages business.
By the way, I stopped by CBS News last night to talk about Powell's testimony – watch the clip here.
Now then, let's get to it.
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Wells has long been a leader in the US mortgage-lending space. But, as Insider has previously reported, Scharf's been signaling that the bank will pare back its exposure to home loans.
The San Francisco-headquartered bank wants to invest in other areas like credit cards and investment banking in a bid to compete with peers like JPMorgan Chase, Bank of America, and Citi.
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The downsizing of mortgages, meanwhile, brings into question Wells' reputation as the Wall Street bank that appeals to "Main Street" because of its broad relationships with American consumers.
Such changes have raised questions over how Wells will look in the future. Will it simply be a slimmed-down version of its current self? Is it part of Scharf's plan to distance the bank from a fake-accounts scandal unveiled six years ago?
To be sure, it's not just Wells that's feeling the pinch of a cooling home-loan market. JPMorgan Chase has also laid off thousands of its home-lending employees, and many more staff at the rival bank are expected to be reassigned.
In other news:
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2. Citi's deploying 4,000 tech hires to tighten up its back office and digitize certain businesses. The hiring will focus on Citi's global payments, trade finance, and lending businesses. The development comes as Citi seeks to move on from unintentional processing snafus related to a $900 million Revlon loan and a Nordic "flash crash."
3. Goldman Sachs will bring some 5,000 jobs to new digs in Dallas, Texas. The City Council will provide more than $18 million in economic incentives to support the office, according to The Dallas Morning News.
4. Dovi Frances, founding partner at VC firm Group 11, wants the investment community to be more open. Frances, who's invested in fintechs like EquityBee and Papaya Global, shared his returns with Insider, which showed more than $1 billion in paper gains.
5. Real-estate brokerage Compass has warned of more job cuts on top the 450 it announced earlier this month. Read the full email Robert Reffkin, Compass' CEO and a former Goldman Sachs banker, sent staff about the layoffs.
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6. Coinbase is lowering how much it's paying influencers. The company, reeling from the meltdown in crypto prices, has blamed the change on "market conditions," according to emails that influencers leaked to Insider.
8. Crypto exchange Binance.US, meanwhile, said it's eliminating fees for all customers on bitcoin spot trading. The exchange, which launched in 2019, is also looking to raise more money from investors, the Wall Street Journal reported. The fee-cut is bad news for rival Coinbase, which saw its shares tumble more than 9% on Wednesday.
9. This $65 million Nevada mansion overlooks Lake Tahoe and comes with a private cable lift. Take a look inside what is the most-expensive house currently for sale in the Silver State.
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