Wells Fargo Chief Financial Officer John Shrewsberry said at an industry conference on Wednesday (Nov. 15) that he isn’t concerned consumers are having a tough time paying back their debts.
According to news from Reuters, Wells Fargo’s Shrewsberry said that banks are being competitive in getting consumers to use their credit cards but that easy access to credit hasn’t led to meaningful credit card defaults yet.
“That’s probably at the margin where excess leverage will show up. I don’t think it’s happened yet,” he stated. What’s more, the CFO said that used vehicle prices are at reasonable levels, so lenders’ losses from that won’t be that bad if a consumer were to default on a loan.
“I don’t think banks, incidentally, are going to get the worst if auto credit goes sideways. I think that will be finance companies more likely,” he continued. As for the bank’s mortgage and consumer lending business, the executive said that Wells Fargo is focused largely on prime jumbo loans that have little chance of defaulting. He said home equity loan activity is currently “very slow.”
The comments come as Wells Fargo Advisors and the Securities and Exchange Commission (SEC) reached a settlement this week which resolved charges that the bank dropped the ball in reporting suspect activities pertaining to money laundering for several years. According to a MarketWatch report published on Tuesday (Nov. 14), though broker-dealers are required to file suspicious activity reports (SARs) to the U.S. Department of Treasury, Wells Fargo failed to do so — or to do it in a timely manner — on 50 or more occasions between March 2012 and June 2013.
The SEC said in the settlement that 45 of the 50 failures were related to continuing activities, with the majority occurring in accounts that were with Wells Fargo Advisors’ U.S.-based branches that dealt with international clients. While Wells Fargo didn’t admit or deny guilt, it did agree to a cease-and-desist order, a censure and to pay a penalty of $3.5 million.
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