Wells Fargo Profit Falls as the Bank Sets Aside Funds for Bad Loans, Company's Shares Drop 3%

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Wells Fargo is the most mortgage-dependent of the six biggest U.S. banks. Sharply higher interest rates are expected to curtail purchase and refinance activity.

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But concerns that the Fed would inadvertently tip the economy into recession have grown this year, weighing heavily on the shares of banks. That's because more borrowers would default on loans, from credit cards to mortgages to commercial lines of credit, in a recession. Led by CEO Charlie Scharf since October 2019, the bank is still operating under a series of consent orders tied to its 2016 fake accounts scandal, including one from the Fed that caps its asset growth. Analysts will be keen to hear from Scharf about any progress being made to resolve those orders.

 

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