Wells Fargo

Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and internationally. The company has operations in 35 countries with over 70 million customers globally. It is considered a systemically important financial institution by the Financial Stability Board.

The firm's primary subsidiary is Wells Fargo Bank, N.A., a national bank which designates its Sioux Falls, South Dakota site as its main office. It is the fourth largest bank in the United States by total assets and is also one of the largest as ranked by bank deposits and market capitalization. Along with JPMorgan Chase, Bank of America and Citigroup. Wells Fargo is one of the "Big Four Banks" of the United States. It has 8,050 branches and 13,000 ATMs. It is one of the most valuable bank brands.

Wells Fargo, in its present form, is a result of a merger between the original Wells Fargo & Company and Minneapolis-based Norwest Corporation in 1998. While Norwest was the nominal survivor, the merged company took the better-known Wells Fargo name and moved to Wells Fargo's hub in San Francisco. At the same time, its banking subsidiary merged with Wells Fargo's Sioux Falls-based banking subsidiary. Wells Fargo became a coast-to-coast bank with the 2008 acquisition of Charlotte-based Wachovia.

Wells Fargo is ranked 41st on the Fortune 500 list of the largest companies in the US.
The company has been the subject of several investigations by regulators. On February 2, 2018, account fraud by the bank resulted in the Federal Reserve barring Wells Fargo from growing its nearly $2 trillion-asset base any further until the company fixed its internal problems to the satisfaction of the Federal Reserve. In September 2021, Wells Fargo incurred further fines from the United States Justice Department charging fraudulent behavior by the bank against foreign-exchange currency trading customers. ''Bloomberg Businessweek'' reported in March 2022 that Wells Fargo was the only major lender in 2020 to reject more home refinancing applications from Black applicants than it approved.

History

Henry Wells and William G. Fargo, who founded American Express along with John Butterfield, formed Wells Fargo & Company in 1852 to provide "express" and banking services to California, which was growing rapidly due to the California Gold Rush. Its earliest and most significant tasks included transporting gold from the Philadelphia Mint and "express" mail delivery that was faster and less expensive than U.S. Mail. American Express was not interested in serving California.

By the end of the California Gold Rush, Wells Fargo was a dominant express and banking organization in the West, making large shipments of gold and delivering mail and supplies. It was also the primary lender of Butterfield Overland Mail Company, which ran a 2,757 mile route through the Southwest to San Francisco and was nicknamed the "Butterfield Line" after the name of company's president John Butterfield. In 1860, Congress failed to pass the annual Post Office appropriation bill leaving the Post Office unable to pay Overland Mail Company. This caused Overland to default on its debts to Wells Fargo, allowing Wells Fargo to take control of the mail route. Wells Fargo then operated the western portion of the Pony Express.
Six years later, the "Grand Consolidation" united Wells Fargo, Holladay, and Overland Mail stage lines under the Wells Fargo name.

In 1872, Lloyd Tevis, a friend of the Central Pacific "Big Four" and holder of rights to operate an express service over the Transcontinental Railroad, became president of the company after acquiring a large stake, a position he held until 1892.

In 1905, Wells Fargo separated its banking and express operations, and Wells Fargo's bank merged with the Nevada National Bank to form the Wells Fargo Nevada National Bank.

During the First World War, the United States government nationalized Wells Fargo's express business into a federal agency known as the US Railway Express Agency (REA). After the war, the REA was privatized and continued service until 1975.

In 1923, Wells Fargo Nevada merged with the Union Trust Company to form the Wells Fargo Bank & Union Trust Company.

In 1954, Wells Fargo & Union Trust shortened its name to Wells Fargo Bank. Four years later, it merged with American Trust Company to form the Wells Fargo Bank American Trust Company. It changed its name back to Wells Fargo Bank in 1962.

In 1968, Wells Fargo was converted to a federal banking charter and became Wells Fargo Bank, N.A. In that same year, Wells Fargo merged with Henry Trione's Sonoma Mortgage in a $10.8 million stock transfer, making Trione the largest shareholder in Wells Fargo until Warren Buffett and Walter Annenberg surpassed him.

One year later, Wells Fargo & Company holding company was formed, with Wells Fargo Bank as its main subsidiary.

In September 1983, a Wells Fargo armored truck depot in West Hartford, Connecticut was the victim of the White Eagle robbery, involving an insider who worked as an armored truck guard, in the largest US bank theft to date, with $7.1 million stolen and two co-workers tied up. The robbery was carried out with the support of the government of Cuba and the cash was initially moved to Mexico City.

Throughout the 1980s and 90s, Wells Fargo completed a series of acquisitions. In 1986, it acquired Crocker National Bank from Midland Bank. Then, in 1987 it acquired the personal trust business of Bank of America. In 1988, it acquired Barclays Bank of California from Barclays plc. In 1991, Wells Fargo spent $491 million to acquire 130 branches in California from Great American Bank. In 1996, Wells Fargo acquired First Interstate Bancorp for $11.6 billion. Integration went poorly as many executives left.

Wells Fargo became the first major US financial services firm to offer Internet banking, in May 1995.

After its string of acquisitions, in 1998, Wells Fargo Bank was acquired by Norwest Corporation of Minneapolis, with the combined company assuming the Wells Fargo name.

It then began on another set of acquisitions, starting in 2000, when Wells Fargo Bank acquired National Bank of Alaska and First Security Corporation. In late 2001, it acquired H.D. Vest Financial Services for $128 million, but sold it in 2015 for $580 million. In 2007, Wells Fargo acquired Greater Bay Bancorp, which had $7.4 billion in assets, in a $1.5 billion transaction. It also acquired Placer Sierra Bank and CIT Group's construction unit that same year. In 2008, Wells Fargo acquired United Bancorporation of Wyoming and Century Bancshares of Texas.

On October 3, 2008, after Wachovia turned down an inferior offer from Citigroup, Wachovia agreed to be bought by Wells Fargo for about $14.8 billion in stock. The next day, a New York state judge issued a temporary injunction blocking the transaction from going forward while the competing offer from Citigroup was sorted out. Citigroup alleged that it had an exclusivity agreement with Wachovia that barred Wachovia from negotiating with other potential buyers. The injunction was overturned late in the evening on October 5, 2008, by New York state appeals court. Citigroup and Wells Fargo then entered into negotiations brokered by the FDIC to reach an amicable solution to the impasse. The negotiations failed. Citigroup was unwilling to take on more risk than the $42 billion that would have been the cap under the previous FDIC-backed deal (with the FDIC incurring all losses over $42 billion). Citigroup did not block the merger, but sought damages of $60 billion for breach of an alleged exclusivity agreement with Wachovia.

On October 28, 2008, Wells Fargo received $25 billion of funds via the Emergency Economic Stabilization Act in the form of a preferred stock purchase by the United States Department of the Treasury. As a result of requirements of the government stress tests, the company raised $8.6 billion in capital in May 2009. On December 23, 2009, Wells Fargo redeemed $25 billion of preferred stock issued to the United States Department of the Treasury. As part of the redemption of the preferred stock, Wells Fargo also paid accrued dividends of $131.9 million, bringing the total dividends paid to $1.441 billion since the preferred stock was issued in October 2008.

In April 2009, Wells Fargo acquired North Coast Surety Insurance Services.

In 2011, the company hired 25 investment bankers from Citadel LLC.

In April 2012, Wells Fargo acquired Merlin Securities. In December 2012, it was rebranded as Wells Fargo Prime Services. In December of that year, Wells Fargo acquired a 35% stake in The Rock Creek Group LP. The stake was increased to 65% in 2014 but sold back to management in July 2018.

In 2015, Wells Fargo Rail acquired GE Capital Rail Services and merged in with First Union Rail. In late 2015, Wells Fargo acquired three GE units focused on business loans equipment financing.

In March 2017, Wells Fargo announced a plan to offer smartphone-based transactions with mobile wallets including Wells Fargo Wallet, Android Pay and Samsung Pay.

In June 2018, Wells Fargo sold all 52 of its physical bank branch locations in Indiana, Michigan, and Ohio to Flagstar Bank.

In September 2018, Wells Fargo announced it would cut 26,450 jobs by 2020 to reduce costs by $4 billion.

In March 2019, CEO Tim Sloan resigned amidst the Wells Fargo account fraud scandal and former general counsel C. Allen Parker became interim CEO.

In July 2019, Principal Financial Group acquired the company's Institutional Retirement & Trust business.

On September 27, 2019, Charles Scharf was announced as the firm's new CEO.

In 2020, the company sold its student loan portfolio.

In May 2021, the company sold its Canadian Direct Equipment Finance business to Toronto-Dominion Bank.

In 2021, the company sold its asset management division, Wells Fargo Asset Management (WFAM) to private equity firms GTCR and Reverence Capital Partners for $2.1 billion. WFAM had $603 billion in assets under management as of December 31, 2020, of which 33% was invested in money market funds. WFAM was rebranded as Allspring Global Investments.

Environmental record

In 2009, Wells Fargo ranked 1st among banks and insurance companies, and 13th overall, in Newsweek Magazine's inaugural "Green Rankings" of the country's 500 largest companies.

In 2013, the company was recognized by the EPA Center for Corporate Climate Leadership as a Climate Leadership Award winner, in the category "Excellence in Greenhouse Gas Management (Goal Setting Certificate)"; this recognition was for the company's aim to reduce its absolute greenhouse gas emissions from its US operations by 35% by 2020 versus 2008 levels.

In 2017, Wells Fargo ranked 182nd out of 500 in Newsweek Magazine's "Green Rankings" of the largest US companies;

Wells Fargo has provided more than $10 billion in financing for environmentally beneficial business opportunities, including supporting commercial-scale solar photovoltaic projects and utility-scale wind projects nationwide.

In 2010, Wells Fargo launched what it believes to be the first blog in its industry to report on its environmental stewardship and to solicit feedback and ideas from its stakeholders.

Wells Fargo History Museum

The company operates the Wells Fargo History Museum at 420 Montgomery Street, San Francisco. Displays include original stagecoaches, photographs, gold nuggets and mining artifacts, the Pony Express, telegraph equipment, and historic bank artifacts. The museum also has a gift shop. In January 2015, armed robbers in an SUV smashed through the museum's glass doors and stole gold nuggets. The company previously operated other museums but those have since closed.

Operations and services

Consumer Banking and Lending

The Consumer Banking and Lending segment includes Regional Banking, Diversified Products, and Consumer Deposits groups, as well as Wells Fargo Customer Connection (formerly Wells Fargo Phone Bank, Wachovia Direct Access, the National Business Banking Center, and Credit Card Customer Service). Wells Fargo also has around 2,000 stand-alone mortgage branches throughout the country. There are also mini-branches located inside of other buildings, which are almost exclusively grocery stores, that usually contain ATMs, basic bank teller services, and an office for private meetings with customers.

Consumer lending

Wells Fargo Home Mortgage is the second largest retail mortgage originator in the United States, originating one out of every four home loans. Wells Fargo services $1.8 trillion in home mortgages, the one of the largest servicing portfolios in the US.

Equipment lending

Wells Fargo has various divisions, including Wells Fargo Rail, that finance and lease equipment to different types of companies.

Wealth and Investment Management

Wells Fargo offers investment products through its subsidiaries, Wells Fargo Investments, LLC, and Wells Fargo Advisors, LLC, as well as through national broker/dealer firms. The company also serves high-net-worth individuals through its private bank and family wealth group.

Wells Fargo Advisors is the brokerage subsidiary of Wells Fargo, located in St. Louis, Missouri. It is the third-largest brokerage firm in the United States as of the third quarter of 2010 with $1.1 trillion retail client assets under management.

Wells Fargo Advisors was known as Wachovia Securities until May 1, 2009, when it was renamed following Wells Fargo's acquisition of Wachovia Corporation.

Securities

Wells Fargo Securities (WFS) is the investment banking division of Wells Fargo & Co. headquartered in Charlotte, with other U.S. offices in New York, Minneapolis, Boston, Houston, San Francisco, and Los Angeles and with international offices in London, Hong Kong, Singapore, and Tokyo.

Wells Fargo Securities was established in 2009 after the acquisition of Wachovia Securities. It provides sales and trading, fixed income, FX and rates, equity, merger and acquisition, high yield, leveraged finance, equity underwriting, private placement, loan syndication, risk management, and public finance services

Cross-selling

A key part of Wells Fargo's business strategy is cross-selling, the practice of encouraging existing customers to buy additional banking services. Customers inquiring about their checking account balance may be pitched mortgage deals and mortgage holders may be pitched credit card offers in an attempt to increase the customer's profitability to the bank. Other banks have attempted to emulate Wells Fargo's cross-selling practices (described by ''The Wall Street Journal'' as a hard sell technique).

International operations

Wells Fargo has banking services throughout the world, with overseas offices in Hong Kong, London, Dubai, Singapore, Tokyo, and Toronto. Back-offices are in India and the Philippines with more than 20,000 staff.

In 2010, hedge fund administrator Citco purchased the trust company operation of Wells Fargo in the Cayman Islands.

Charter

Wells Fargo operates under Charter #1, the first national bank charter issued in the United States. This charter was issued to First National Bank of Philadelphia on June 20, 1863, by the Office of the Comptroller of the Currency. Traditionally, acquiring banks assume the earliest issued charter number. Thus, the first charter passed from First National Bank of Philadelphia to Wells Fargo through its 2008 acquisition of Wachovia, which had inherited it through one of its many acquisitions.

Lawsuits, fines and controversies

1981 MAPS Wells Fargo embezzlement scandal

In 1981, it was discovered that a Wells Fargo assistant operations officer, Lloyd Benjamin "Ben" Lewis, had perpetrated one of the largest embezzlements in history, through its Beverly Drive branch. During 1978 - 1981, Lewis had successfully written phony debit and credit receipts to benefit boxing promoters Harold J. Smith ( né Ross Eugene Fields) and Sam "Sammie" Marshall, chairman and president, respectively, of Muhammed Ali Professional Sports, Inc. (MAPS), of which Lewis was also listed as a director; Marshall, too, was a former employee of the same Wells Fargo branch as Lewis. In excess of $300,000 was paid to Lewis, who pled guilty to embezzlement and conspiracy charges in 1981, and testified against his co-conspirators for a reduced five-year sentence. (Boxer Muhammed Ali had received a fee for the use of his name, and had no other involvement with the organization.)

Higher costs charged to African-American and Hispanic borrowers

Illinois Attorney General Lisa Madigan filed suit against Wells Fargo on July 31, 2009, alleging that the bank steers African Americans and Hispanics into high-cost subprime loans. A Wells Fargo spokesman responded that "The policies, systems, and controls we have in place – including in Illinois – ensure race is not a factor..." An affidavit filed in the case stated that loan officers had referred to black mortgage-seekers as "mud people," and the subprime loans as "ghetto loans." According to Beth Jacobson, a loan officer at Wells Fargo interviewed for a report in ''The New York Times'', "We just went right after them. Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans." The report presented data from the city of Baltimore, where more than half the properties subject to foreclosure on a Wells Fargo loan from 2005 to 2008 now stand vacant. And 71 percent of those are in predominantly black neighborhoods. Wells Fargo agreed to pay $125 million to subprime borrowers and $50 million in direct down payment assistance in certain areas, for a total of $175 million.

Failure to monitor suspected money laundering

In a March 2010 agreement with US federal prosecutors, Wells Fargo acknowledged that between 2004 and 2007 Wachovia had failed to monitor and report suspected money laundering by narcotics traffickers, including the cash used to buy four planes that shipped a total of 22 tons of cocaine into Mexico.

Overdraft fees

In August 2010, Wells Fargo was fined by United States district court judge William Alsup for overdraft practices designed to "gouge" consumers and "profiteer" at their expense, and for misleading consumers about how the bank processed transactions and assessed overdraft fees.

Settlement and fines regarding mortgage servicing practices

On February 9, 2012, it was announced that the five largest mortgage servicers (Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo) agreed to a settlement with the US Federal Government and 49 states. The settlement, known as the National Mortgage Settlement (NMS), required the servicers to provide about $26 billion in relief to distressed homeowners and in direct payments to the federal and state governments. This settlement amount makes the NMS the second largest civil settlement in U.S. history, only trailing the Tobacco Master Settlement Agreement. The five banks were also required to comply with 305 new mortgage servicing standards. Oklahoma held out and agreed to settle with the banks separately.

On April 5, 2012, a federal judge ordered Wells Fargo to pay $3.1 million in punitive damages over a single loan, one of the largest fines for a bank ever for mortgaging service misconduct, after the bank improperly charged Michael Jones, a New Orleans