By John Aidan Byrne
New York Post
September 25, 2016
Wells Fargo has set the US banking industry on an irreversible course of massive labor market destruction, analysts say.
Tens of thousands of workers at US consumer banks are expected to be eliminated much sooner than many had anticipated after Wells Fargo — facing the wrath of lawmakers — settled allegations that it secretly opened 2 million bogus credit-card and other accounts for customers.
The bank was made to cough up $185 million to federal and state regulators.
The scandal has put retail bankers nationwide in a stomach-churning tailspin amid fears of industrywide investigations and a clampdown on employee sales practices at other banks.
“This will accelerate the trend from physical delivery to virtual delivery of banking services, with tens of thousands of job losses in retail banking, as the industry transitions from bricks to clicks,” CLSA bank analyst Mike Mayo told The Post.
And that has execs now moving swiftly to cost-saving online platforms for more processing, as well as sales and marketing-type services, while coping with the Wells Fargo fallout, analysts say.
A perception that machines will solidify the peace with regulators is also attractive in the wake of the Wells catastrophe.
With more than 200,000 employees nationwide, Wells Fargo is one of the nation’s top financial employers, and the No. 1 home lender. The big kahunas like Wells and JPMorgan, which has 180,000 staffers, may see a sharp reduction in head count as automation begins to wreak havoc on workers’ jobs.
Last year, the banking industry globally shed about 100,000 jobs due to some of the same hostile forces. Bank of America alone trimmed it payroll by 10,000 last year — and by one 2016 estimate is eyeing as many as 8,000 layoffs in its consumer banking unit as more of its customers adapt to the bank’s digital platform.
“Wells Fargo screwed the rest of the industry pretty badly,” said bank analyst Dick Bove of Rafferty Capital Markets, summing up the sentiment in many lending circles in the wake of last week’s damning Senate testimony by Wells Fargo Chief Executive John Stumpf.
Bove told The Post that the scandal would most likely scuttle a campaign by House Republicans to blunt the regulatory impact of Dodd-Frank.
And that campaign would have stymied the Financial Stability Oversight Council, and torpedoed the Volcker Rule that currently restricts speculative (and sometimes highly profitable) proprietary investing by banks.
“They’ve clearly stated they’re going after every bank in the country,” Bove said of US lawmakers, who pulled no punches last week, with Sen. Elizabeth Warren (D-Mass.) calling for Stumpf’s resignation.
So joining free pens on your local bank’s endangered list just might be additional tellers.
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