Tag Archives: fargo

Business/Economics, U.S.

Wells Fargo Making Profits, How? Magic?

Another big bank involved in foreclosing on homeowners, is reporting record profits.

OAKLAND, CA - JULY 22: A customer uses an ATM at a Wells Fargo Bank office July 22, 2009 in Oakland, California. Wells Fargo reported an 81 percent increase in second quarter profits with earnings of $2.58 billion, or 57 cents per share compared to $1.75 billion, or 53 cents per share one year ago. (Photo by Justin Sullivan/Getty Images)

According to the Mercury News, Wells Fargo posted a $3.3 billion profit for the 3rd quarter.  That’s 3.1% higher than last year, and yet, the bank’s actual revenues were down from the previous year, by 7.1%.  How do you get profits that are up from the previous year, when your revenues are down from the previous year?

Time for some math.  The formula for figuring profits is:

Profit = Revenue – Costs, or, Revenue – Costs = Profit

However you look at it, basically you can not have an increase in profits with  decreased revenue.  Unless you’ve somehow come up with a way of eliminating your costs, or some other accounting Magic?  (take some economics or accounting courses and you will find lots of Magic being used)

As far as foreclosures go; John Stumpf, Wells Fargo’s chairman and chief executive, says they are following the rules.

SAN FRANCISCO - APRIL 27: A Wells Fargo security guard attempts to move a protestor from the front of the building during a demonstration outside of the Wells Fargo Bank shareholders meeting April 27, 2010 in San Francisco, California. Hundreds of people held a demonstration outside of the Wells Fargo Bank shareholders meeting to protest Wells Fargo's alleged involvement in the financial collapse and excessive CEO and executive bonuses. (Photo by Justin Sullivan/Getty Images)

In a CNN/Fortune article Wells Fargo tries to make themselves look like the lesser evil in the housing foreclosure conspiracy.   Wells Fargo claims they are foreclosing only 1 in 12 mortgages (oh that’s not a lot?), compared to Bank of America with 1 in 7 mortgages being foreclosed.

CHICAGO - APRIL 09: A Wells Fargo sign hangs on the door of a Wells Fargo home mortgage office on April 9, 2009 in Chicago, Illinois. Wells Fargo & Co said it expects to post a record $3 billion first-quarter profit exceeding analysts� expectations. (Photo by Scott Olson/Getty Images)