Investors "Buy The Dip" After Trump Slams Wells Fargo"s "Bad Acts"

In an out-of-the-blue tweet perhaps aimed at reassuring his base that his not "with the banks", President Trump took aim at Wells Fargo this morning...

Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating!

— Donald J. Trump (@realDonaldTrump) December 8, 2017

And while the initial reaction was modest, the volume is very heavy...

But it did not take long for dip-buying algos to emerge...

Is Trump trying to make nice with Pocahantas after all?

Georgetown Bank Teller Steals $185,000 From Homeless Customer With Garbage Bag Full Of Cash

Where did all this money come from?

That’s probably the first question that Phelon Davis of District Heights, Maryland, asked himself when a homeless man shuffled into the Wells Fargo branch in Georgetown where Davis worked as a teller three years ago and tried to deposit a garbage bag full of cash.

His next question was probably "do you think he"d notice if some of it went missing?"

Instead of helping the customer deposit the money into his account, Davis instead decided to take advantage of the situation, setting up a fraudulent second account under the customers’ name and eventually stealing more than $185,000 from the man, according to the Washington Post.

The 29-year-old bank teller stole more than $185,000 from a homeless customer who tried to deposit a garbage bag full of cash at a Wells Fargo branch in Georgetown.

In a deal with prosecutors, Davis pleaded guilty this week to one federal felony count of interstate transportation of stolen property, which is punishable by up to 10 years in prison.

Deepening the intrigue surrounding the story, the court filings didn’t name the man, or furnish an explanation as to how he came to possess such a large sum of cash. It describes the man only as a "street vendor."

Here’s WaPo with more:

The victim was unnamed in court filings but was described as a homeless street vendor and longtime Wells Fargo customer who had more than one account that had gone dormant because of a lack of activity.

Court filings did not identify the customer or say why a homeless person would have a large amount of cash in a bag when he showed up at the M Street NW branch where Davis worked. Outside the courtroom, Davis’s attorney, Bruce Allen Johnson Jr., said he also did not know how the individual came to have the cache of cash. “That’s the million-dollar question,” Johnson said.

In plea papers, Davis acknowledged that the customer had “thousands of dollars of cash” that he wanted to deposit in October 2014, but he lacked identification. Davis told the customer where to get ID documents and a Social Security card, and also noted the customer “had a surprisingly large balance with the bank,” according to a signed, three-page statement of the crime.

Soon after the customer tried to deposit the cash, Davis fraudulently opened a new account by forging the customer’s signature, set up an ATM card, personal identification number, email address and online logon that he controlled.

He initially funded the account with $3,000 from one of the customer’s other accounts, according to WaPo.

Slowly over the next two years, Davis transferred $177,400 between the customer’s accounts, withdrew $185,440, and transported at least $5,000 withdrawn from ATMs in DC to his home in Maryland – triggering the federal charge.

The customer remained oblivious to the fraud, as he could only see the balance by checking on his account at an ATM.

Davis used the stolen money for a down payment on his home, to pay off personal debt, and fund vacations in Aruba, Jamaica, the Dominican Republic and Mexico.

As part of his plea, Davis agreed to pay back the stolen money, and Assistant US Attorney Kondi J. Kleinman said he would likely face a sentence of 18 to 30 months under federal guidelines. However, the sentencing judge has discretion to assign a longer, or shorter, sentence.  

“Did you, in fact, take money from an account as Mr. Kleinman described?” U.S. Magistrate Robin M. Meriweather asked in the Thursday plea hearing.

“Yes, ma’am, I did,” said the soft-spoken Davis.

Davis’s attorney, Johnson, said outside of court that “he greatly regrets the decisions he made and is dedicated to doing everything he can to make it right, including restitution. He is putting everything aside to repay the money and do what he can to repair what he’s done to his name, his reputation and to the victim.”

WaPo reports that a date for Davis’s sentencing hasn’t been set.
 

Wells Chairman Out Following "Unbelievable, Outrageous" Scandal

Two weeks after the latest consumer scandal involving Warren Buffett"s favorite bank, Wells Fargo, broke when the NYT reported that as many as 800,000 people who took out car loans from Wells were also charged for auto insurance they did not need, with many of them still paying for it, while some were forced to default as a result of this obligations, and just days after the NYC Comtroller Scott Stringer, said that what happened at Wells Fargo is an "unbelievable, outrageous, full-blown scandal"... 

This is a full-blown scandal — again. It’s unbelievable, outrageous, sad, and yet quintessential Wells Fargo. This isn’t just a corporate debacle. It’s caused real human harm. It’s reflective of a system that Americans feel is rigged against the little guy, and sadly symbolic of a culture that puts short-term profits ahead of creating sustainable value for shareowners. Everyday families have suffered and tens of millions of hard-earned dollars were stripped from unsuspecting Americans, many of whom are struggling just to get by. In the end, shareowners ultimately suffer the long-term consequnces.

... moments ago Dow Jones reported that Wells Fargo Chairman Stephen Sanger is likely to step down.

• WELLS FARGO NONEXECUTIVE CHAIRMAN SANGER LIKELY TO STEP DOWN -- SOURCES


• WELLS FARGO ACTIVELY WEIGHING BOARD CHANGES -- SOURCES


• WELLS FARGO VICE CHAIR ELIZABETH DUKE COULD REPLACE SANGER -- SOURCES


• WELLS FARGO PLANNING TO NAME AT LEAST ONE NEW DIRECTOR BY LABOR DAY -- SOURCES

And now the lawsuits begin.

Wells Fargo Charged 800,000 Customers for Fake Car Insurance, Stole 25,000 Cars—Nobody Charged

One of the largest banks in the United States is no stranger to scandal, and the latest case of fraud surrounding Wells Fargo has affected nearly 1 million people, with many of them still paying the price for fraudulent charges attached to their accounts.

According to an internal report from the bank’s executives, detailed in a report by The New York Times this week, more than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need, and the additional expenses “pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossession.”

The report looked at the insurance policies sold to Wells Fargo customers from January 2012 to July 2016. State insurance regulations required the bank to notify customers of the insurance policy—which was typically more expensive than the auto insurance customers had already purchased—before it was imposed. However, the report found that in many cases, Wells Fargo did not comply.

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As a result, estimates from the report claimed that Wells Fargo now owes at least $73 million to wronged customers. According to The Times, “Wells Fargo officials confirmed that the improper insurance practices took place and said the bank was determined to make customers whole.”

This is not the first time Wells Fargo has found itself at the center of a scandal…

In August 2010, Wells Fargo came under fire for stealing millions from its customers through excessive overdraft fees, which included the practice of manipulating the order in which transactions are processed, in order to capitalize on the overdraft fees customers are issued as a result.

READ MORE:  Spain Sets Massive Precedent — Charges Its Central Bankers in Court

A district court judge in California weighed in on the practice, and determined that Wells Fargo “acted in bad faith” by manipulating transactions, and that “no credible evidence was presented at trial to support the bank’s argument that high-to-low resequencing was deployed [because] customers wanted or benefitted from it.” The judge came to the conclusion that “gouging and profiteering were Wells Fargo’s true motivations.”

As The Free Thought Project reported in April 2016, Wells Fargo admitted that it “falsely certified that many of its home loans qualified for Federal Housing Administration insurance” from 2001 to 2008, and it “failed to file timely reports on several thousand loans that had material defects or were badly underwritten” from 2002 to 2010.

However, despite the shocking admission from the megabank that it deceived both the U.S. government and thousands of Americans for nearly a decade, no one was charged and Wells Fargo was not held accountable for its contribution to the housing market collapse.

In September 2016, federal regulators revealed that Wells Fargo employees had secretly created nearly 2 million unauthorized bank and credit card accounts since 2011. Customers were forced to pay fraudulent charges, and the employees who created the accounts were rewarded with sales bonuses.

As a result, Wells Fargo claimed it fired 5,300 employees for ethics violations. However, many of the former employees who spoke out about the bank’s fraudulent practices claimed that they were fired because they attempted to report the fraud to the bank’s internal ethics line.

Now, in addition to contributing to the housing market collapse, the latest report has revealed that Wells Fargo also harmed the lives of hundreds of thousands of Americans by sending them into debt, and even repossessing their cars, all over fraudulent charges. And yet, to go along with the incredulous fact that the bank still has customers, its ties to the U.S. government have also ensured that top executives are unlikely to face any accountability for its actions.

Moody's Warns That Private-Label Credit Card Issuers Will Be Crushed By Retail Implosion

We"ve spent a lot of time of late talking about the retail implosion currently underway in the United States courtesy of a massive oversupply of retail square footage and a simultaneous shift in demand toward more online purchases.  In fact, we recently highlighted a report from Credit Suisse which suggested that nearly 9,000 retail locations could permanently close their doors in 2017, the most since at least 2000.

According to the Swiss bank"s calculations, on a unit basis, approximately 2,880 store closings were announced YTD, more than twice as many closings as the 1,153 announced during the same period last year. Historically, roughly 60% of store closure announcements occur in the first five months of the year. By extrapolating the year-to-date announcements, CS estimates that there could be more than 8,640 store closings this year, which will be higher than the historical 2008 peak of approximately 6,200 store closings, which suggests that for brick-and-mortar stores stores the current transition period is far worse than the depth of the credit crisis depression.

And here were those closings broken down by retailer:

Of course, the store closures are only part of the story as the broader economic impact of the coming retail apocalypse will be felt through a whole host of industries.  As Moody"s points out today, one such space that will be hit particularly hard is the "private-label" credit card issuers with just 5 companies accounting for nearly 80% of all credit balances outstanding.  

A small number of banks dominate US private-label card issuance, with the top five accounting for 79% of balances as of early last year. The largest issuers are: Synchrony Financial Inc. (unrated); Citigroup Inc. (Baa1, stable); Alliance Data Systems Corporation (unrated) via its Comenity Bank (unrated) subsidiary, which was formerly known as World Financial Network National Bank; Capital One Financial Corporation (Baa1, stable); Wells Fargo & Company (A2, stable) and TD Group US Holdings LLC (A2, stable).

"As retailers close stores in an effort to improve profitability over the coming years, the trend will put upward pressure on private label charge-offs, owing to the fact that some cardholders will lose access to geographically convenient stores, even as a portion of those cardholders shift at least a portion of their spending to online channels," Jody Shenn, a Moody"s Vice President says.

Meanwhile, the hardest hit names will likely be Synchrony and Alliance Data as they rely almost entirely on private-label credit cards.

Additionally, sales challenges could create incentives for retailers to push for looser underwriting standards by their card issuing partners, which would weaken the credit quality of these accounts, especially new accounts.

"Among the largest private-label card issuers, only Synchrony and Alliance Data rely heavily on the business," Warren Kornfeld, a Moody"s Senior Vice President, says. "Private-label and cobranded cards account for almost the entire loan books of both, each with heavy retail card concentrations."

Citi and Capital One rely on private-label and co-branded card loans for a high single-digit percentage of their earnings, also with heavy retail concentrations. Wells Fargo and TD Bank have very modest retail private-label and co-branded credit card exposures relative to their overall loan portfolios.

While showing up on the right-hand side of this chart was probably sold to investors as a "yugely" positive thing over the past couple of years, we suspect the messaging in future presentations will have to be "tweaked" (chart per Alliance Data investor presentation).

Meanwhile, it seems that both Alliance Data...

...and Synchrony are already starting to show some signs of stress.

But we"re sure it"s no big deal.

The World's Top 100 Companies: Revenue Versus Profits

Just over a month ago, Visual Capitalist published a very tidy data visualization that summed up the top 50 companies in the world by revenue, based on data from Forbes.

But, as Jeff Desjardins notes, just looking at revenue numbers doesn’t give a full picture on how these companies compare – and many investors care much more about a different performance metric: profit.

Roday’s data visualization from Ishtyaq Habib shows the top 100 biggest companies by market value, but uses circles to represent both the revenue and profit for each company. There’s also an interactive version of the same chart here as well, which highlights the specific numbers for each company highlighted.

APPLE = A MONEY-MAKING MACHINE

The first noticeable difference in this version?

It’s that Apple is unparalleled in its ability to make money. In fact, Apple’s 2016 profit of $45 billion is far bigger than any other company, including Berkshire Hathaway ($24 billion), JPMorgan Chase ($24 billion), Wells Fargo ($22 billion), Alphabet ($19 billion), Samsung ($19 billion), Toyota ($17 billion), Johnson & Johnson ($16 billion), or Walmart ($14 billion).

The only companies that can compare with Apple were Chinese banks like ICBC, Agricultural Bank of China, or China Construction Bank, but in many ways these state-owned enterprises are on an entirely different playing field, anyways.

Also impressive: Apple’s profits are bigger than the revenues of massive companies like Coca-Cola ($41.5 billion) or Facebook ($27.6 billion).

MARGINS, SCHMARGINS

Unfortunately, not every company can make a 21% profit margin on $217 billion of revenue like Apple.

Other organizations need to rely on razor-thin margins and volume to make things work. Walmart only brought in $14 billion of profit off of a whopping $485 billion of revenue – a margin of just 2.8%. Meanwhile, fast-growing Amazon was in a similar boat with margins of 1.7%, largely provided by its wildly successful AWS service.

Lastly, it is also worth noting that some on the list did not make a margin at all. These are mostly companies that are suffering from the challenges of down cycles in natural resources. Chevron and mining giant Glencore, for example, were two of the Top 100 Companies that both lost money in 2016, while BP essentially broke even.

How Rising Rates Are Hurting America's Largest Mortgage Lender, In One Chart

While one can argue that both JPM and Bank of America posted results that were ok, with some aspects doing better than expected offset by weakness elsewhere, even if moments ago JPM stock just hit an all time high, there was little to redeem the report from the scandal-ridden largest mortgage lender in America, Wells Fargo. Not only did the company miss revenues significantly, reported $21.6bn in Q4 topline, nearly $1 bn below the $22.4bn consensus, but it had to reach deep into its non-GAAP adjustment bag to convert the $0.96 EPS miss into a $1.03 EPS beat (net of "accounting effect"), but the details of its core business were, well, deplorable, which perhaps was to be expected following the recent drop in new credit card and bank account growth, following last year"s fake account scandal.

Incidentally, Wells Fargo reported its latest customer metrics alongside 4Q earnings, and in December the bank said that the retail public continued to shy away, as new checking accounts plunged 40%Y/Y while new credit card applications tumbled 43%.  On the other hand, deposit balances debit card transactions continued growing which probably is not a good sign, if only for the Keynesians in the administration: it means that consumers are saving.

But back to Wells results, which revealed that in Q4, the bank"s ROE, one of Buffett"s favorite indicators, fell to 10.94%. which was the lowest quarterly level posted in years accordint to the WSJ. "While the return had been grinding lower for some time, largely due to the declining interest-rate environment, the fourth quarter also marked the first, full reporting period since the bank’s sales-tactics scandal erupted in September."

More troubling however, was that in Q4, Wells overall profit fell to $5.27 billion, or 96 cents a share (excluding the various non-GAAP addbacks), down from $5.58 billion, or EPS of $1 in Q4 2015.

So back to Wells Fargo"s retail banking business. Here the bank reported that while credit card outstandings rose 5% compared to $33.14 billion last quarter and jumped 8% from $34.04 billion in the year-earlier period, new accounts tumbled 52% to 319,000 from 667,000 last quarter and fell 47% from 597,355 in the year-earlier period, once again this is a reflection of the bank"s ongoing legal scandals.

But it was the bank"s bread and butter, mortgage lending, that was the biggest alarm because as a result of rising rates, Wells" residential mortgage applications and pipelines both tumbled, and after hitting multi-year highs in the third quarter when mortgage rates were likewise hugging multi-year lows, in Q4 Wells" mortgage applications plunged by $25bn from the prior quarter to $75bn, while the mortgage origination pipeline plunged by nearly half to just $30 billion, and just shy of all time lows recorded in late 2013 and 2014. Moynihan"s explanation was redundant: "the pipeline is weaker because of fewer refi loans." This should not come as a surprise: just one month ago, Freddie Mac warned that as mortgage rates continue to surge, "expect mortgage activity to be significantly subdued in 2017."

Wells Fargo did not even have to wait that long, and as shown in the chart below, the biggest US mortgage lender is already suffering.

Expect even greater declines in the coming quarters should rates continue to rise.

"Fake News" Facebook Lands On List Of "America's Most Hated Companies"

Facebook just can"t seem to catch a break lately.  From questionable privacy policies and mass data collection of its users to its handling of the so-called "Fake News" epidemic (see "George Soros Is Funding Facebook"s "Third-Party Fact Checking" Organization Targeting "Fake News""), Mark Zuckerberg is pissing off a lot of people these days.  Unfortunately, when your entire business model is based on "friending" others, the alienation of various groups has caused enough people to "dislike" Facebook that the company has landed itself on 24/7 Wall Street"s list of "America"s Most Hated Companies."

Coming in at #6, Facebook narrowly beat out Spirit Airlines, which, for anyone who has been left stranded by Spirit in Chicago"s O"Hare Airport in the middle of winter, that speaks volumes. 

1. Comcast (NASDAQ: CMCSA)


2. Bank of America (NYSE: BAC)


3. Mylan (NASDAQ: MYL)


4. McDonald’s (NYSE: MCD)


5. Wells Fargo Bank (NYSE: WFC)


6. Facebook (NASDAQ: FB)


7. Spirit (NASDAQ: SAVE)


8. DISH Network (NASDAQ: DISH)


9. Sears (NASDAQ: SHLD)


10. Sprint (NYSE: S)


11. Wal-Mart (NYSE: WMT)


12. Charter Communications (NASDAQ: CHTR)

Meanwhile, the two largest cable providers in the country also made the
list which is astonishing given their impeccable reputation for such
helpful customer service and 100% internet reliability.  But, only about 40% of
the households in the U.S. rely on those two companies for service so
it"s probably not a big deal.

But, of the top 12, Facebook was the only Silicon Valley giant to make the list despite, as 24/7 Wall Street points out, being a "boon for shareholders since it"s IPO."

Facebook has been a boon for shareholders since its IPO.
The company’s stock is now trading over 200% higher than its 2012 Wall
Street debut. However, not everyone is pleased with the social media
platform. In recent years, the company has drawn significant
criticism over its privacy policies and the mass data collection of its
users.

Recently, the company faced
sharp criticism for not doing enough to curb the spread of fake news
leading up to the U.S. presidential election. Since then, in an
apparent attempt to mend public relations, the company announced a
series of new policies aimed at identifying and flagging fake news
stories on its site.

 Oh well, at least they beat Sears.

Man Who Stole $1.6 Million Bucket Full Of Gold In Midtown Manhattan Has Been Identified

Three weeks ago we reported that in what may have been one of the most brazen thefts in Manhattan"s jewelry district, a man brazenly swiped an 86-pound bucket full of gold worth $1.6 million from the back of an unattended Loomis armored truck on West 48th Street in the Diamond District on Sept. 29, in broad daylight, as tourists and locals were walking in and out of the jewelry stores that line the block.

The whole incident was caught on closed-circuit camera.

The suspect, decribed as 5 feet 6 inches tall, 150 pounds and in his 50s according to the police, managed to get away without a hitch. The police suspected that the unidentified man was lying low in Orlando or Miami until things blow over in the Big Apple.

Overnight the police not only identified the man, but according to their latest speculation, the gold thief has moved on from Florida, and is now to be found as far away from NY as possible.

On Tuesday, NYPD identified the man as Julio Nivelo. He is now believed to be in Los Angeles. NYPD Det. Martin Pastor says Nivelo, 53, is a convicted felon who"s known to the NYPD as Luis Toledo, among other aliases. He"s a career thief who"s been arrested seven times and deported four times to his native Ecuador, according to Pastor. 

Nivelo, a native of Ecuador, fled to Orlando, Fla., before heading to California, WNBC reported on Tuesday night. Mr. Nivelo, who was living in West New York, N.J., at the time of the theft, had previously been arrested seven times and deported four times, the station reported.

Surveillance video from the the theft showed Nivelo loitering around the truck before one guard goes to make a pickup, and the other guard heads to the front seat to grab his cellphone. Those 20 seconds were long enough for the thief to strike: he goes to grab the 86-pound bucket - roughly half his weight - and makes a run for it, though he clearly has difficulty maneuvering it. The video shows the thief setting down the heavy bucket, putting it on his shoulder, then taking a breather. He takes another few steps and pauses again. The normally 10-minute walk takes him an hour. He then jumps into a van at 49th Street and Third Avenue.

The police released several photos of Mr. Nivelo. Nivelo was a man about town before the heist, it appears: photos show him posing at Washington Square Park and with a figure of the pope at Madame Tussaud"s Wax Museum.

Loomis has offered a $100,000 reward for information leading to his arrest and conviction, police sources said.

Below is the NYPD post seeking the public"s help in finding Nivelo... and the $1.6 million in gold that is supposedly in his vicinity.

* * *

WANTED: Burglary (Manhattan)

The suspect has been identified as follow:

• Nivelo, Julio


• AKA: David Vargas


• 53 year-old Hispanic male


• 5’5″, 155 pounds with dark hair.

************************************

The New York City Police Department is asking the public’s assistance identifying the individual depicted in the attached surveillance video and photographs in regard to a armored truck burglary that occurred within the confines of the MTN Precinct. Details are as follows:

 It was reported to the NYPD’s Major Case Squad that on Thursday, September 29, 2016, at approximately 4:30 p.m. an armored truck company making a pick up discovered that a 5 gallon aluminum pail weighing 86 pounds containing gold flakes (valued at 1.6 million dollars) was stolen from the rear of their armored truck.  The truck was parked in front of 48 West 48th Street between 5th and 6th Avenues. The unidentified individual is then seen lifting the 5 gallon pail from the truck and fleeing East bound on West 48 Street toward Third Ave. There are no reported injuries as a result of this incident.

The individual is described as a:

•   Male Hispanic 5’6″, 150 lbs, 50-60 years old wearing a black vest, green shirt, blue jeans carrying a black messenger bag.

 Surveillance video and photos of the individual were captured near the corner of 5th Avenue and 48th Street.  The video shows the suspect fleeing with the stolen black aluminum 5 gallon pail.

 Anyone with information in regards to this incident is asked to call the NYPD’s Crime Stoppers Hotline at 800-577-TIPS or for Spanish 1-888-57-PISTA (74782). The public can also submit their tips by logging onto the Crime Stoppers Website at WWW.NYPDCRIMESTOPPERS.COM or texting their tips to 274637(CRIMES) then enter TIP577.

 All calls are kept strictly confidential.

Freddie Mac Issues Warning As Mortgage Rates Soar

Blink, and you missed your chance to refi. And according to nationalized mortgage giant Freddie Mac, it"s about to get worse.

As shown last week, as a result of the recent spike in yields, the population of eligible refinance candidates has already plunged by more than half. As Black Knight pointed out, as of the end of November, though there are still 2M borrowers who could save $200+/month by refinancing and a cumulative $1B/month in potential savings, this is less than half of the $2.1B/ month available just four weeks ago.

Since then the number has shrunk substantially as rates have continued their relentless move higher.

According to the latest Wells Fargo refi rates, a 30 Year Fixed mortgage will now cost a prospective creditor some 4.625%. This was in the mid-3%s just a few months ago.

It was not just refis: according to the latest Freddie Mac update, the 30 Year Fixed has jumped to 4.16%, from 3.94% just a month ago, and 3.5% as of early October.

As Freddie notes in its latest press release, this week"s mortgage rate survey was completed prior to the FOMC announcement. The 30-year mortgage rate rose 3 basis points on the week to 4.16 percent. The MBA"s Applications Survey posted drops in both refinance and purchase applications, registering the impact of recent mortgage rate increases.

Some details:

• 30-year fixed-rate mortgage (FRM) averaged 4.16 percent with an average 0.5 point for the week ending December 15, 2016, up from last week when it averaged 4.13 percent. A year ago at this time, the


• 30-year FRM averaged 3.97 percent.


• 15-year FRM this week averaged 3.37 percent with an average 0.5 point, up from last week when it averaged 3.36 percent. A year ago at this time, the 15-year FRM averaged 3.22 percent.


• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.19 percent this week with an average 0.4 point, up from last week when it averaged 3.17 percent. A year ago, the 5-year ARM averaged 3.03 percent.

But more troubling was Freddie"s explicit warning, that "if rates continue their upward trend, expect mortgage activity to be significantly subdued in 2017."

Which we find strange, because the catalyst that sent stocks soaring on Thursday, was the latest NAHB homebuilder optimism report, which jumped to the highest level since 2005, rising by the most in over a decade which the NAHB said was "largely attributable to a post-election bounce, as builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability.”

While we understand builders enthusiasm about Trump, we hate to break it to them that without a viable mortgage market, optimism will quickly turn to pessimism. Then again, as the current "Trumpflation euphoria" phase continues, brushing off any potential headwinds, logic doesn"t much matter for now.

"I Went To A Wells Fargo Branch... And This Is What Happened Next"

Submitted by Wolf Richter via WolfStreet.com,

They have learned nothing.

I walked into my Wells Fargo branch to put my data backup into my safe deposit box, as I’ve been doing for a decade. This routine business turned into a wake-up call about safe deposit boxes and churned up insights into how Wells Fargo conducts to this day its cross-selling efforts: the algo makes them do it!

To clarify, I’m a happy customer. Wells Fargo handles day-to-day banking for me and my vast WOLF STREET media-mogul-empire corporation. The people are nice, and I have not yet noticed any fraudulent accounts in my name.

It doesn’t bother me that every time I call one of the national numbers with a problem or question, I have to swat away their offers of “pre-approved” credit cards, lines of credit, or other high-margin products. Having run a car dealership earlier in my life, I appreciate the art of aggressive cross-selling. However, we never-ever did it over the phone! We waited till we saw the whites of their eyes.

Yet at the counter for safe deposit boxes, I was in for a surprise. The young man – a 30-year-old employee would have looked suspiciously over-age at that branch – checked the computer for my box number. There was a problem. He asked for my driver’s license. He rummaged through a file cabinet, found the signature cards. He conferred with another kid. He came back, embarrassed. Turns out, the fact that I’ve been renting the box for a decade wasn’t in their computer system. So no-go.

I thought: That’s how easy it is to block you from getting into your safe deposit box.

He called over a “personal banker” – a young woman – to “fix” the problem. We trotted off to her desk. She said the bank had “updated” its computer system. My box rental hadn’t made it into the new version. So she got busy on her computer. Took a while. She had to set it up. There were fees and discounts to discuss. There were things I had to read, agree to, and sign. She was just about finished, when she suddenly did a mini double-take of her screen. Everything came to a halt.

“I don’t mean to sell you anything,” she said after a long pause, with an embarrassed smile, “but….”

She could see the whites of my eyes! She turned her computer screen. It was filled with a Wells Fargo credit card promo. You’ve been pre-approved for this great offer, she said. “Your credit must be really good. Not many people get this offer.”

An algorithm had decided it was time to cross-sell; and she had to cross-sell to finish her job. That credit card promo was the next step in the procedure.

The algo that forces employees at the branch and at call centers to cross-sell was designed by humans, after strategic decisions had been made and funded, under the direction of top management at headquarters, such as current CEO Timothy Sloan and former CEO John Stumpf.

This cross-selling push is embedded in the software, is algorithm-driven, and kicks in at the most effective moment.

Even the recent disclosures, settlements, the keel-hauling in California and other states, and further investigations have not motivated Wells Fargo to strip these algos out of its computer system. They’re still there, working hard for your own good.

After she got rid of that promo page, and elegantly handled another topic she wanted to cover, I was finally allowed to get into my safe deposit box.

The next day, I received an email from Wells Fargo and Gallup. It asked for “feedback” on my “recent Wells Fargo visit” and offered me a chance to win $1,000.

Now I was curious. Though I never fill out surveys, I decided to check this out.

Up front, it asked if I spoke “to a banker about opening a NEW account or product,” or about one of my “CURRENT Wells Fargo accounts or products.” Was Wells Fargo trying to figure out if the “banker” did her job and pitched a new account?

After it asked me to rate my “overall satisfaction” with the visit, it listed a series of questions about the employee, whether they did things right the first time, etc. etc. It never once asked about the bank, how it screwed up with the safe deposit box.

And this: “The employee asked questions to identify options for meeting your financial needs.” Should I check “strongly agree” to help the employee out? She deserved it. She was nice. Clearly, the survey is checking on her to see if she did her job and tried to sell me something I didn’t need or want.

Remember, I’d gone to the branch to get into my safe deposit box, and not for retirement planning.

“Did you visit the branch to resolve a problem or error?” Nope. A “problem or error” occurred after I got there.

“Did you work with an employee to establish or confirm your financial priorities?” And “The employee provided products or services that aligned with your current financial needs.”

Again and again, each time couched in slightly different terms, the survey checked on the employee to see if she had been sufficiently aggressive in cross-selling.

The fact that surveys check to see if employees did their job in cross-selling tells me how big the pressure on them still is, even after all the revelations.

These survey results are used to manage employees. They probably get them rubbed in their faces during sales meetings and in performance evaluations. They know they’re being evaluated, not only by the algo-driven computer system at the bank, but also via customer responses, to make sure they push new accounts, credit cards, credit lines, brokerage accounts, and other products.

This is inbred into the bank. It’s part of its management doctrine and computer system. It’s partnering with Gallup to accomplish this. A contract with Gallup isn’t set up at the lower levels. And a few slaps on the wrist aren’t going to change a whole lot. It’s not just Wells Fargo. It’s the industry. It puts banks into the same category as car dealers. So steel yourself when you deal with them (just like you would walking into a dealership).

No bank is “so powerful as to be untouchable,” explained California State Treasurer John Chiang. Read…  Wells Fargo Getting Clocked by California: What, No Perp-Walk?