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Sniper

Wells Fargo tells customers it’s shuttering all personal lines of credit

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This could be a really big story. My guess is that they see something coming behind the curtain, and are circling the wagons in advance...

  • The bank is shutting down all existing personal lines of credit in coming weeks and no longer offers the product, according to customer letters reviewed by CNBC.
  • The product, which typically gave users $3,000 to $100,000 in revolving credit lines, was pitched as a way to consolidate higher-interest credit card debt, pay for home renovations or avoid overdraft fees on linked checking accounts.
  • With its latest move, Wells Fargo warned customers that the account closures “may have an impact on your credit score,” according to a frequently asked questions segment of the letter.

“Wells Fargo recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts,” the bank said in the six-page letter. The move would let the bank focus on credit cards and personal loans, it said.

https://www.cnbc.com/2021/07/08/wells-fargo-is-shutting-down-all-personal-line-of-credit-accounts-.html

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1 hour ago, Displaced Texan said:

Hmm…a sign of impending interest hikes? 

Doubt it. I mean lines of credit usually have adjusting rates if they aren't for a fixed sum.  Given the bank my guesses are either:

1) They have been up to shady shit again and found it internally first. Getting out of the business for now decreases their chances of being caught. I guess one of the things they could be caught at was writing lines of credit to people who should have been ineligible, and they are concerned with them defaulting on unsecured credit, so they are limiting the depth of that hole. that fear could be interest rate related. 

2) We are like a month out of the last reduced standards stress test, and they passed. They are now eligible for buybacks they weren't before, and they may be moving the outlay of cash from personal loans to that. 

3) It's actually not fear of hikes but fear that low rates are here for a while. That means this type of loan won't be terribly profitable and comes with no collateral to foreclose on. A subprime car loan or sub prime mortgage is better than a sub prime personal loan. 

 

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Just saw this article. This might explain it. People have been loading up on debt, and WF wants to play Prevent Defense from defaults.

Borrowing Is Back as Sign-Ups for Auto Loans, Credit Cards Hit Records

Americans are borrowing again, in some cases at levels not seen in more than a decade.

Consumer demand for auto loans and leases, general-purpose credit cards and personal loans was up 39% in April compared with the same period last year, according to credit-reporting firm Equifax Inc. EFX -1.32% It was also up 11% compared with April 2019, according to Equifax, which measured how often lenders checked consumers’ credit reports to make loan decisions.

“There’s a significant increase in consumer-credit demand and a growing appetite to use credit on things like those vacations that were postponed for 18 months,” said Tom Aliff, senior vice president of analytics consulting at Equifax.

Lenders also issued nearly six million general-purpose credit cards in March, up 32% from a year earlier and the highest March figure on record.

https://www.wsj.com/articles/borrowing-is-back-as-sign-ups-for-auto-loans-credit-cards-hit-records-11625736601

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Article said they also stopped home equity loans last year and auto loans. 

Considering WF is a large bank, and they aren't just raising a standard for loan approval but cutting entire segments...

Makes me think they are trying to limit damages to their balance sheets. Not sure why, why it's obvious their liabilities are an issue. 

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14 minutes ago, JackDaWack said:

Article said they also stopped home equity loans last year and auto loans. 

Considering WF is a large bank, and they aren't just raising a standard for loan approval but cutting entire segments...

Makes me think they are trying to limit damages to their balance sheets. Not sure why, why it's obvious their liabilities are an issue. 

I could see auto loans and helocs going away temporarily because those were pandemic inflated markets. Even sane loans are likely to wind up underwater. 

Personal loans are less exposed I'd think, and it is also in an area they got caught doing bad things before. 

If it is trying to insulate themselves from risk of default, there should be matching stats on individual debt levels. A lot of people used their helicopter money to pay off debt. 

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7 minutes ago, raz-0 said:

A lot of people used their helicopter money to pay off debt. 

That reminds me, the Catalina Wine Mixer is coming up, got some helicopters to sell! 
 

 

 

 

 

Sorry, that line made me laugh and think about that stupid  movie. 

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1 hour ago, raz-0 said:

Personal loans are less exposed I'd think, and it is also in an area they got caught doing bad things before. 

If it is trying to insulate themselves from risk of default, there should be matching stats on individual debt levels. A lot of people used their helicopter money to pay off debt.

Personal loans and lines of credit are unsecured, right? And at lower interest rates than credit cards.

Some speculation is that it might be tied to the upcoming eviction moratorium and foreclosure moratorium ending at the end of the month. Did tenants/landlords or homeowners draw off their lines of credit to stay solvent, and now it will be time to "pay the piper", and they're tapped out?

Also, how many small business owners have lines, and have drawn them down to stay alive and the businesses are struggling for workers and sales volume? I expect many business owners to just throw in the towel if we go back into any type of lockdowns.

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9 minutes ago, Sniper said:

Personal loans and lines of credit are unsecured, right? And at lower interest rates than credit cards.

Some speculation is that it might be tied to the upcoming eviction moratorium and foreclosure moratorium ending at the end of the month. Did tenants/landlords or homeowners draw off their lines of credit to stay solvent, and now it will be time to "pay the piper", and they're tapped out?

Also, how many small business owners have lines, and have drawn them down to stay alive and the businesses are struggling for workers and sales volume? I expect many business owners to just throw in the towel if we go back into any type of lockdowns.

Well you bring up what could be a major scumbag move which is to cut off options from real estate owners to force them into foreclosure. 

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Here is the Zerohedge.com take on it:

https://www.zerohedge.com/markets/wells-fargo-infuriates-customers-abruptly-shuttering-personal-credit-business

Customers credit scores are also going to take a hit:

 "Per CNBC, those whose credit lines are involuntarily closed will still see their FICO scores penalized as if they had elected to close the credit line willingly".

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8 minutes ago, Bomber said:

Here is the Zerohedge.com take on it:

https://www.zerohedge.com/markets/wells-fargo-infuriates-customers-abruptly-shuttering-personal-credit-business

Customers credit scores are also going to take a hit:

 "Per CNBC, those whose credit lines are involuntarily closed will still see their FICO scores penalized as if they had elected to close the credit line willingly".

The interesting thing in zerohedge is down the page. 
 

https://www.zerohedge.com/markets/consumer-credit-soars-most-record-credit-card-borrowings-explode

 

credit card spending up massively, this new move cuts people off from consolidation loans. 

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57 minutes ago, raz-0 said:

credit card spending up massively, 

I thought everyone was loaded up with cash from all the stimulus checks, extra unemployment and savings from staying home for a year? 

 

57 minutes ago, raz-0 said:

 this new move cuts people off from consolidation loans. 

 The heck with consolidation loans, that just prolongs the agony and the rates are no bargain.

If you get in too deep with CC debt better just to go delinquent, settle the debt and try not get in that situation again. 

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4 hours ago, raz-0 said:

credit card spending up massively, this new move cuts people off from consolidation loans.

Wonder how much of that credit card debt and consolidation loans were from the Reddit boys buying Game Stop stock and Bitcoin?

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13 hours ago, raz-0 said:

Well you bring up what could be a major scumbag move which is to cut off options from real estate owners to force them into foreclosure. 

Part of the plan. Force everyone into foreclosure.
Have your buddies buy everything up cheap. 

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13 hours ago, raz-0 said:

 

credit card spending up massively, this new move cuts people off from consolidation loans. 

that is kinda scary. even back in the early 2000's when i ran this shop for the previous owner i noted that a good 90% of our customers appeared to be living on nothing but credit cards. they'd come in to pay for the job, open their wallets, and not a single bill of cash in there, but rather a half dozen or more cards.

 to be honest, i personally don't think cards....credit or debit......should be used for anything other than absolute emergencies. but that's just me.

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49 minutes ago, 1LtCAP said:

that is kinda scary. even back in the early 2000's when i ran this shop for the previous owner i noted that a good 90% of our customers appeared to be living on nothing but credit cards. they'd come in to pay for the job, open their wallets, and not a single bill of cash in there, but rather a half dozen or more cards.

 to be honest, i personally don't think cards....credit or debit......should be used for anything other than absolute emergencies. but that's just me.

You need to be responsible but unfortunately that's a stretch for some people. We charge everything possible and pay off in full every month. Work the rewards, we've go a lot of free airline tickets over the yrs doing  just that.

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40 minutes ago, siderman said:

You need to be responsible but unfortunately that's a stretch for some people. We charge everything possible and pay off in full every month. Work the rewards, we've go a lot of free airline tickets over the yrs doing  just that.

i don't think it was people working the rewards. it always seemed like people living beynd their means.

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11 hours ago, Sniper said:

Wonder how much of that credit card debt and consolidation loans were from the Reddit boys buying Game Stop stock and Bitcoin?

Interesting.  I think the urge to buy big with dollar signs in the eyes was there when bitcoin was recently double what is is now.  It also helps settle me as to why my robinhood and coinbase accounts are so meager.... I only invest what I can afford to.  I humbly keep my day job!

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3 hours ago, siderman said:

You need to be responsible but unfortunately that's a stretch for some people. We charge everything possible and pay off in full every month. Work the rewards, we've go a lot of free airline tickets over the yrs doing  just that.

Speaking of credit cards, I'm reading on other forums that people are reporting that their available credit line on their cards is being reduced. Banks are reducing their exposures. Something for you guys to keep an eye on.

Also, when these lines of credit at WF, and even your credit lines on cards gets reduced, your FICO scores can take a hit, due to an increase in your utilization and ratios... Can affect any future borrowing you might do in the future.

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