US banks are now preparing to report massive losses and shrinking margins according to new media reports citing fresh data.
According to a recent report, the largest banks in the U.S. are set to announce third-quarter results characterized by reduced profit margins and falling earnings.
JPMorgan Chase and Wells Fargo are scheduled to release their Q3 earnings this Friday.
Analysts predict that JPMorgan will show a nearly 8% decrease in earnings per share, while Wells Fargo is anticipated to report a nearly 14% decline, according to data from the London Stock Exchange Group (LSEG).
Next week, Bank of America is also expected to report about a 14% drop in earnings per share, Citigroup is projected to see a 20% decrease, and Goldman Sachs may experience a substantial 35% decline.
This widespread drop in earnings is attributed to increasing deposit costs, weak demand for loans, and a decrease in net interest income (NII).
Despite the pressures from shrinking margins, banks are expected to generate robust revenues from other sectors, including investment banking and trading.
Analysts at Oppenheimer noted that consumer loan delinquencies have decreased and highlighted that banks have built significant reserves to address potential losses in office loans.
Oppenheimer also forecasts an average 7% increase in investment banking revenues across the industry, although banks may report a downturn in trading revenue due to a seasonal decline in trading volumes.
For more U.S. Bank News and updates like this, join the newsletter or opt-in for push notifications.
This year we’ve been able to increase push notifications slots making it more convenient than ever for new readers to receive their daily market news and updates.
Wells Fargo now faces a major lawsuit for cheating customers, after it underpaid clients to ‘enrich itself’ at the expense of others.
A class-action lawsuit filed on Tuesday accuses Wells Fargo of underpaying interest to clients participating in its cash sweep program, claiming the bank benefitted at the expense of its customers.
The lawsuit, brought by plaintiff Darren Cobb in the U.S. District Court for the Northern District of California, alleges that Wells Fargo breached its fiduciary duty, acted unfairly, violated contractual obligations, and engaged in unjust enrichment.
Cobb asserts that the bank undercompensated its customers in violation of its responsibilities, thereby enriching itself.
According to the complaint, Wells Fargo failed to provide a reasonable interest rate on customer cash, instead offering minimal rates while profiting significantly from rising interest rates.
The lawsuit highlights that customers in the cash sweep program received only 0.15% interest throughout much of 2023, despite short-term U.S. Treasury Bills yielding around 5.25%, creating a substantial disparity.
The complaint also notes that some account holders received just 0.02% on their cash balances.
In a typical cash sweep program, a brokerage moves uninvested cash from accounts into interest-bearing accounts.
The lawsuit claims Wells Fargo uses these funds to generate significant profits by earning more interest than it pays to clients.
It contrasts Wells Fargo’s practices with those of Fidelity, which reportedly transfers uninvested cash into a money market fund earning approximately 5%.
Wells Fargo declined to comment on the lawsuit, which follows a previous legal action filed last month by a wealth management client.
The bank has faced regulatory scrutiny for its interest rate practices in cash sweep accounts.
Last fall, it revealed that the Securities and Exchange Commission (SEC) was examining its cash sweep options for advisory clients.
In July, during an earnings call, Wells Fargo announced plans to raise interest rates in its cash sweep program, a change expected to reduce the bank’s earnings by around $350 million annually, aimed at aligning rates more closely with those offered in money market funds.
The recent quarterly report from Wells Fargo disclosed details about the SEC investigation, indicating that discussions regarding potential resolutions are ongoing.
The bank is not alone in facing scrutiny; other financial institutions, including Morgan Stanley and LPL Financial, have also encountered class-action lawsuits related to their cash sweep policies.
This new lawsuit seeks damages for the plaintiff and other affected customers, including restitution and the return of profits earned by Wells Fargo, along with prejudgment interest, attorney fees, and additional relief.
For more US Bank News and updates like this, join the newsletter or opt-in for push notifications.
Market News Today – Wells Fargo Now Faces A Major Lawsuit For Cheating Customers.
US banks now hold 7x more unrealized losses than during the 2008 financial crisis, according to fresh data from the FDIC.
The FDICreported that unrealized losses on securities totaled a whopping $516.5 billion, which was an increase of $38.9 billion from the previous quarter.
This increase was largely due to higher losses on residential mortgage-backed securities, which were affected by rising mortgage rates, per the report.
FDIC-insured institutions reported a net loss of $32.1 billion in the fourth quarter of 2008 ($12.1 billion during the 1st) — demonstrating just how overleveraged institutions have gotten today.
The banking industry also reported total assets of $24.0 trillion in the first quarter 2024, an increase of $291.2 billion (1.2 percent) from fourth quarter 2023.
The quarterly increase was mainly due to higher balances in trading accounts (up $176.1 billion, or 23.2 percent), cash and balances due from depository institutions (up $79.0 billion, or 2.8 percent), and securities (up $39.9 billion, or 0.7 percent).
Alarmingly, the number of banks on the FDIC’s “Problem Bank List” increased from 52 to 63.
Total assets held by problem banks also rose $15.8 billion to $82.1 billion.
Problem banks represent 1.4 percent of total banks, which is within the normal range for non-crisis periods of 1 to 2 percent of all banks, per the FDIC.
However, the growing number of problem banks and unrealized losses points towards a shaky financial system.
In 2008, the economic consequences forced people to foreclose their homes, jobs were lost, and retirement savings were completely wiped out.
The social implications the collapse created put families on the street and triggered severe community strain.
The crisis affected economies worldwide, leading to global slowdowns and increased economic inequality in many regions.
Industry experts such as Robert Kiyosaki and Grant Cardone have warned that the people are going to experience a system crash unlike anything ever seen before.
But I’m curious to know what you think — leave your thoughts below.
For US Bank News, Closures, and updates like this, join the newsletter or opt-in for push notifications.
This year we’ve been able to increase push notifications slots making it more convenient than ever for new readers to receive their daily market news and updates.
A massive US bank now gets hit with an AML investigation over flaws related to its internal controls and crimes risk management.
The Office of the Comptroller of the Currency (OCC) has taken enforcement action against Wells Fargo, raising concerns about the bank’s anti-money laundering (AML) controls and financial crimes risk management.
This development could impact the potential lifting of Wells Fargo’s asset cap and might signal increased scrutiny for other major banks.
On Thursday, the OCC announced it found several deficiencies in Wells Fargo’s AML practices, including issues with suspicious activity reporting, customer due diligence, and customer identification protocols.
The regulatory agreement mandates that Wells enhance its AML and sanctions risk management, secure OCC approval for new offerings, and notify the agency before expanding certain services.
Wells Fargo stated it is already addressing many of the requirements outlined in the agreement and is committed to resolving them with urgency.
Analyst Scott Siefers from Piper Sandler noted that while the formal action was anticipated, it still represents a setback in the bank’s progress to resolve regulatory issues.
Wells Fargo has been under the regulatory microscope since the fallout from its 2016 fake accounts scandal.
Currently, the bank operates under a $1.95 trillion asset cap imposed by the Federal Reserve, one of nine consent orders against it, though six have been lifted since Charlie Scharf became CEO.
The OCC’s 26-page agreement, which did not impose any fines, requires Wells to improve its internal controls and reporting mechanisms related to AML and sanctions practices.
The bank must also enhance its audit program and ensure data integrity for compliance systems.
Jefferies analyst Ken Usdin noted that the broad requirements could impact Wells Fargo’s future growth strategy, but the practical implications remain unclear.
Despite the seriousness of AML issues, Royal Bank of Canada analyst Gerard Cassidy believes this enforcement action will not hinder efforts to lift the asset cap, as it primarily addresses past consumer banking problems.
Wells Fargo has invested significantly in its risk and control operations, hiring around 10,000 employees and increasing spending by $2.5 billion annually since 2018.
This suggests the new regulatory action may not drastically alter overall costs.
Other major banks have also faced scrutiny regarding their AML and sanctions programs.
Bank of America and Citi have highlighted related risks in their recent filings, while JPMorgan Chase continues to disclose ongoing investigations from a 2019 money-laundering incident in India.
Additionally, Canadian lender TD is under investigation for its U.S. AML program related to drug trafficking allegations.
As the financial landscape evolves, the potential for similar enforcement actions against other banks remains uncertain, leaving the industry on alert.
For more US Bank News like this, join the newsletter or opt-in for push notifications.
Market News Today – A Massive US Bank Now Gets Hit With AML Investigation.
Citibank now fires a whistleblower for ‘underperformance’, after the former employee provided records requested by the OCC.
Citi has filed a countersuit against its former employee, Kathleen Martin, alleging that she was terminated not for refusing to falsify records for the Office of the Comptroller of the Currency (OCC), as she claimed in her lawsuit from May, but rather for being unable to properly fulfill the duties of her role.
Martin, who was let go from her position as Citi’s interim data transformation chair in September 2023 after nearly two years with the bank, had alleged in her lawsuit that she was fired for not agreeing to Chief Operating Officer Anand Selva’s request to conceal information from the OCC that would make the lender “look bad.”
In a revised lawsuit, Kathleen Martin has accused Citi’s Chief Operating Officer Anand Selva of intentionally deceiving the bank by wanting to misrepresent Citi’s compliance metrics to the Office of the Comptroller of the Currency (OCC).
Martin claims Selva sought to conceal information from the OCC that would have made the bank “look bad.”
However, Citi maintains that Martin’s termination in September 2023 was not due to her refusal to falsify records, but rather because she lacked the necessary “leadership and engagement skills” to effectively execute the role of interim Data Transformation Chair, which she had been appointed to after the previous chair, Rob Casper, departed the company.
Citi asserts that during Martin’s interviews and assessment for the interim role, it was identified that she needed to improve in areas like her “dogmatic nature, lack of innovation and lack of experience driving the execution of complex change across Citi.”
Once Casper left, Citi’s senior leadership, including COO Selva, determined that Martin could not successfully fulfill the demands of the interim chair position.
According to Citi, COO Anand Selva tried to help the plaintiff, Kathleen Martin, improve her performance in the interim Data Transformation Chair role.
Selva allegedly set up one-on-one meetings and working groups to facilitate better collaboration and working relationships with stakeholders.
Selva’s HR team also provided Martin with a senior mentor to support her development.
In May 2023, Citi leadership discussed a plan to improve Martin’s performance.
In July, Selva conveyed Martin’s mid-year review before she raised any concerns about his behavior.
Soon after, Martin contacted HR and expressed fears about her job security.
Citi claims that Martin “felt her position was at risk,” but the bank asserts that internal documents showed she “exceeded expectations” and that CEO Jane Fraser had commended her for her “gravitas” and ability to build “strong relationships” at the bank.
However, Citi says Martin failed to heed the feedback provided, and she was ultimately removed from the Data Transformation Chair role because she lacked the “executive level relationships” and leadership needed to successfully execute the data transformation efforts.
Citi says the data transformation work was too critical for the bank to tolerate Martin’s underperformance.
Citi denies Martin’s claims that she protested the reporting of a key metric accurately or that Selva objected to it.
The bank says Selva and Martin met in September 2023 to discuss reporting certain metrics using red, amber, and green scales.
This year we’ve been able to increase push notifications slots making it more convenient than ever for new readers to receive their daily market news and updates.
Wells Fargo now accidentally drains money from customer accounts, leaving balances in the red according to a new media report.
Wells Fargo reportedly caused a customer’s account to go negative for several days due to a mix-up involving a paper check.
Gerald Monroe Mann, a Sacramento resident and long-time Wells Fargo customer, wrote a $400 check, but later discovered that $4,000 had been withdrawn from his account, reports CBS News.
After spending hours on the phone with the bank, Mann learned that the recipient had cashed the check at Wells Fargo, which mistakenly added an extra zero to the amount.
This error drained both Mann’s checking and savings accounts, leaving him $900 in the negative.
He expressed frustration over the situation, stating that he was told he would have to wait ten business days for the issue to be resolved, effectively cutting him off from his finances.
“Now I’m screwed because you screwed up.
Not cool.
Why would they treat me like that?” Mann said, emphasizing that he has been a loyal customer and that money is important to him.
In response, Wells Fargo stated that they returned the missing funds to Mann within about four business days after learning of the mistake.
They explained that banks have to follow specific processes and timeframes to investigate check disputes and assist customers in reclaiming funds.
Although Mann was not charged overdraft fees, he went without access to his money for a total of eight days.
He criticized the bank’s handling of the situation, saying, “When they make a mistake, it shouldn’t be the person’s problem.
This can’t be the first time it happened.
You need to have something in place to take care of this so people aren’t screwed in the process.”
Separately, Wells Fargo has been accused of overcharging customers in a lawsuit that alleges the bank giant has participated in unethical behavior.
For more Banking News like this, join the newsletter or opt-in for push notifications.
Bank News Today – Wells Fargo Now Accidentally Drains Money From Customer Accounts.
Citibank now fires a whistleblower for ‘underperformance’, after the former employee provided records requested by the OCC.
Citi has filed a countersuit against its former employee, Kathleen Martin, alleging that she was terminated not for refusing to falsify records for the Office of the Comptroller of the Currency (OCC), as she claimed in her lawsuit from May, but rather for being unable to properly fulfill the duties of her role.
Martin, who was let go from her position as Citi’s interim data transformation chair in September 2023 after nearly two years with the bank, had alleged in her lawsuit that she was fired for not agreeing to Chief Operating Officer Anand Selva’s request to conceal information from the OCC that would make the lender “look bad.”
In a revised lawsuit, Kathleen Martin has accused Citi’s Chief Operating Officer Anand Selva of intentionally deceiving the bank by wanting to misrepresent Citi’s compliance metrics to the Office of the Comptroller of the Currency (OCC).
Martin claims Selva sought to conceal information from the OCC that would have made the bank “look bad.”
However, Citi maintains that Martin’s termination in September 2023 was not due to her refusal to falsify records, but rather because she lacked the necessary “leadership and engagement skills” to effectively execute the role of interim Data Transformation Chair, which she had been appointed to after the previous chair, Rob Casper, departed the company.
Citi asserts that during Martin’s interviews and assessment for the interim role, it was identified that she needed to improve in areas like her “dogmatic nature, lack of innovation and lack of experience driving the execution of complex change across Citi.”
Once Casper left, Citi’s senior leadership, including COO Selva, determined that Martin could not successfully fulfill the demands of the interim chair position.
According to Citi, COO Anand Selva tried to help the plaintiff, Kathleen Martin, improve her performance in the interim Data Transformation Chair role.
Selva allegedly set up one-on-one meetings and working groups to facilitate better collaboration and working relationships with stakeholders.
Selva’s HR team also provided Martin with a senior mentor to support her development.
In May 2023, Citi leadership discussed a plan to improve Martin’s performance.
In July, Selva conveyed Martin’s mid-year review before she raised any concerns about his behavior.
Soon after, Martin contacted HR and expressed fears about her job security.
Citi claims that Martin “felt her position was at risk,” but the bank asserts that internal documents showed she “exceeded expectations” and that CEO Jane Fraser had commended her for her “gravitas” and ability to build “strong relationships” at the bank.
However, Citi says Martin failed to heed the feedback provided, and she was ultimately removed from the Data Transformation Chair role because she lacked the “executive level relationships” and leadership needed to successfully execute the data transformation efforts.
Citi says the data transformation work was too critical for the bank to tolerate Martin’s underperformance.
Citi denies Martin’s claims that she protested the reporting of a key metric accurately or that Selva objected to it.
The bank says Selva and Martin met in September 2023 to discuss reporting certain metrics using red, amber, and green scales.
For more U.S. Bank news and updates like this join the newsletter or opt-in for push notifications.
This year we’ve been able to increase push notifications slots making it more convenient than ever for new readers to receive their daily market news and updates.
Wells Fargo is now accused of overcharging customers in a lawsuit that alleges the bank giant has participated in unethical behavior.
A Wells Fargo customer named Barbara Prado has filed a proposed class-action lawsuit against the bank, alleging that Wells Fargo has been overcharging thousands of its customers on their mortgage loan accounts.
According to Prado, Wells Fargo realized there was an error in the charges, but instead of being transparent about it, the bank simply sent out cashier’s checks to affected customers to try to settle the damages without explaining what had happened.
Prado claims that Wells Fargo’s representatives are unable or unwilling to tell customers how much they were overcharged or how the amounts in the cashier’s checks were determined.
She argues that the bank’s actions have been “illusory and wholly inadequate” and have left consumers facing ongoing harm and out-of-pocket losses that have not been properly reimbursed.
The lawsuit alleges that Wells Fargo is guilty of unjust enrichment and has violated California’s Unfair Competition Law.
It also claims that the bank has violated California’s penal code by receiving property that was obtained through theft and by concealing or withholding that stolen property.
Overall, the lawsuit accuses Wells Fargo of systematically overcharging its mortgage customers and then attempting to cover up the issue through opaque and inadequate remedial actions.
Separately, Wells Fargo is facing a federal investigation over issues in its anti-money laundering and sanctions programs, the bank said.
Since September 2016, WFC faced significant challenges with numerous penalties and sanctions, including a cap on the asset position by the Federal Reserve.
Earlier this month, Wells Fargo faced a class action lawsuit alleging that it mismanaged its employee health insurance plan, forcing thousands of U.S.-based employees to overpay for prescription medications.
For more U.S. Bank news and updates like this join the newsletter or opt-in for push notifications.
Market News Today – Wells Fargo Is Now Accused of Overcharging Customers in Lawsuit.
Massive US banks now prepare for millions to default according to Q2 reports, as institutions increase capital to cover insolvencies.
Big banks such as JPMorgan Chase, Bank of America and Wells Fargo are boosting their financial defenses as they prepare for customer inflow to dwindle, affecting the ability for the average American to pay their bills.
According to the latest Q2 2024 financial reports from major banks, they are significantly increasing the amount of capital they are setting aside to cover potential losses from rising credit card and loan defaults.
Collectively, these banks are allocating billions of dollars into emergency provisions and loan loss reserves to prepare for an anticipated increase in insolvencies and non-performing loans.
This reflects the banks’ growing concerns about the potential for a rise in credit card delinquencies and loan defaults in the coming months.
By bolstering their loss-absorbing capital buffers, the banks are attempting to proactively mitigate the financial risks posed by a potential surge in credit-related delinquencies and insolvencies.
This suggests the banks foresee a deterioration in consumer credit quality and are taking prudent steps to strengthen their balance sheets and resilience against such adverse credit trends.
The significant increase in these emergency loan loss provisions across the banking sector signals that the institutions are bracing for a potential economic downturn that could lead to a rise in loan defaults and credit-related write-offs.
This move underscores the banks’ efforts to position themselves to better withstand any upcoming challenges in the credit markets.
JPMorgan Chase is leading the way, increasing its provisions from $1.88 billion in the first quarter of this year to $3.05 billion – a $1.17 billion jump.
Meanwhile, Bank of America has set aside $1.5 billion, up from $1.3 billion in the previous quarter, and Wells Fargo set aside $1.24 billion, up from $938 million in the previous quarter.
The increasing balances show banks are anticipating increasing economic risk in the months ahead as commercial real estate flounders and as consumers pile up a whopping $1.02 trillion in credit card balances, according to TransUnion.
Delinquency rates across various types of debt are already on the rise, and the New York Federal Reserve says total US household debt hit $17.69 trillion in the first quarter of this year, an increase of $184 billion from the previous quarter.
The number includes mortgage balances, which rose by $190 billion to $12.44 trillion, and auto loans, which increased by $9 billion to $1.62 trillion.
This year we’ve been able to increase push notifications slots making it more convenient than ever for new readers to receive their daily market news and updates.
