Tuesday, February 20, 2007

Wells Fargo: Layoffs Due to Tighter Credit Policy

by Bill McBride on 2/20/2007 04:16:00 PM

From Charlotte Observer: Wells Fargo cuts 250 jobs in Fort Mill

The cuts are the latest fallout from problems in the business of subprime lending -- lending at high interest rates. Demand for new high-rate loans is shrinking even as defaults on existing loans are rising, leaving lenders with less revenue and more expenses.

Wells Fargo, like other large mortgage lenders, has responded to the defaults by tightening the requirements for new loans, further shrinking the volume. The Fort Mill office, which is part of the company's subprime operation, will have less work to do.

"We tightened our credit policy," Wells Fargo said in a statement. "This decision directly impacts our nonprime loan volume, which in turn impacts staffing levels in the areas devoted to managing these loans."