Wells Fargo (third US bank) closes personal credit lines. What is happening?
Wells Fargo just announced that it is shutting down all of its existing personal lines of credit – a popular product offered by the retail banking-focused Wall Street giant – a move that is likely to infuriate legions of customers.
Revolving lines of credit, which will be closed in the coming weeks and typically allow users to borrow anywhere from $ 3K to $ 100,000, have been proposed as a way to consolidate better interest credit card debt, pay for home renovations or avoiding overdraft fees on checking accounts attached to the loan.
Clients have been given 60 days' notice to return, after which their accounts will be closed and credit repayment plans proposed.
According to CNBC, it is the latest "difficult decision" facing Wells CEO Charlie Scharf, forced to cut the bank's turnover due to the restrictions imposed by the Fed after the scandal that involved numerous branches. and in which the directors opened checking accounts without the knowledge of the customers.
"Wells Fargo recently reviewed its product offerings and decided to stop offering new personal and portfolio credit lines and close all existing accounts," the bank said in the six-page letter. The move would allow the bank to focus on credit cards and personal loans.
The closures will put many customers in difficulty who, at any moment, will find themselves without an important source of liquidity, indeed they will see their FICO trust score worsened as if they had closed these lines voluntarily.
In 2018, the Fed banned Wells Fargo from expanding its balance sheet until central bank regulators decided the bank corrected its compliance deficiencies exposed by the fake accounts scandal and other consumer abuse.
However, the timing of the closure of these lines is particular. In the esthete of 2020, the bank had already reduced them, but due to doubts about the solvency of customers. In this case, however, it happens without much justification and the released assets are not sure that they will be used equally fruitfully, given the ongoing decline in US government bond yields. In short, a move not completely clarified, in its nature and which leaves many doubts.
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The Wells Fargo article (third US bank) closes the personal credit lines. What is happening? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/wells-fargo-terza-banca-usa-chiude-le-linee-di-creito-personali-che-sta-succedendo/ on Fri, 09 Jul 2021 05:59:59 +0000.