In the latest fallout from its takeover of Wachovia, Wells Fargo & Co. said Wednesday that it's closing its 638 Wells Fargo Financial stores and slashing 3,800 jobs in the consumer finance unit that made higher-rate mortgage, auto and credit card loans.
The San Francisco-based bank also said it will stop originating subprime mortgage loans that it keeps in its own portfolio. Higher-rate loans to borrowers with poor credit have been blamed for playing a central role in the nation's financial crisis.
Consumer advocates were glad to see the bank end one type of subprime mortgage but questioned the bank's continued role in making higher-cost loans. Wells will continue to serve a "broad credit spectrum of customers" through conventional and Federal Housing Administration loans made through its Wells Fargo Home Mortgage unit, said Wells spokesman Steve Carlson.
The bank said it no longer needed the Wells Fargo Financial locations because it now has 6,600 bank branches and 2,200 mortgage offices nationwide after buying Charlotte's Wachovia in 2008. It said less than 2 percent of its real estate loans originated through Wells Fargo Financial stores in the first quarter of 2010.
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