The sub-prime mortgage meltdown is still erasing financial services jobs, even after causing the bulk of the industry's 200,000-plus job cuts since 2007. Wells Fargo said last week it will shutter its sub-prime lending unit, Wells Fargo Financial, and lay off 3,800 of the unit's 14,000 employees.
About 2,800 will lose their jobs within 60 days, and another 1,000 within 12 months. receive pink slips within 60 days and an additional 1,000 during the coming year, the bank said Thursday.
While Wells Fargo Financial's 638 storefront offices across the U.S. will close, the company says about 10,000 employees will be transferred to other Wells Fargo businesses. They'll continue extending auto loans and credit cards to sub-prime customers, but will no longer offer sub-prime mortgage loans. Most of the discontinued unit's residential lending consists of FHA-insured mortgages, which are prime loans. Wells already covers that niche through a separate unit, Wells Fargo Home Mortgage.
Wells is the largest U.S. mortgage lender and one of the few large banks that still had a dedicated sub-prime lending operation. HSBC closed the last of its U.S. sub-prime lending offices last year. The Los Angeles Times observes:
Nearly all current and former Wall Street firms had subprime arms that are now defunct.
While regional players still operate subprime finance networks, only Citigroup's CitiFinancial unit remains as a national player, and it announced this year that it would close hundreds of offices.