Wells Fargo & Co. cut more jobs in central Iowa again this week.
The banking giant laid off another 36 workers Thursday in its 10th round of cuts since April, according to a notice filed with Iowa Workforce Development. The largest private employer in the Des Moines metro, Wells Fargo has been laying off workers amid a slowdown in its Iowa-based home mortgage division.
The latest cuts brings the total number of affected local workers to 402 since April, according to state filings. The layoffs also come three weeks before Wells Fargo shares its next quarterly report.
"We regularly review and adjust staffing levels to align with market conditions and the needs of our businesses.," spokesperson Kevin Friedlander said in a statement Friday. "We work hard to identify opportunities for employees in other parts of the company so we can retain as many employees as possible. Where it’s not possible, we provide assistance, such as severance and career counseling."
Why is Wells Fargo laying off employees?
Spokespeople for the company have previously blamed a downturn in the home lending business this year. The Mortgage Bankers Association projected Monday that U.S. borrowers would take out 6.6 million mortgages this year, down 51% from 2021. The trade group expects the number of new loans to continue to drop next year, to 6 million.
Nationally, construction on new homes and apartments dropped this spring and early summer, according to the U.S. Census Bureau. The trend reversed in August, with most of the growth coming from new multi-family units.
At Wells Fargo, the bank has recorded $2.46 billion in home mortgage revenue through the first six months of this year, down 43% from 2021. Net income is down 36% during that period, to $6.79 billion.
Chief Financial Officer Mike Santomassimo signaled that workers could lose their jobs during a call with analysts in July.
"It’s possible that we have a further decline in mortgage banking revenue in the third quarter," he said. "We are making adjustments to reduce expenses in response to the lower origination volumes, and we expect these adjustments will continue over the next couple of quarters.”
The mortgage business has struggled as the Federal Reserve's Open Markets Committee has attempted to slow the decades-high inflation pace by increasing borrowing costs across the country. The Fed raised interest rates by 0.75 percentage points Wednesday and signaled that its board of governors believes it will send the country into a recession to tamp down inflation.
As a result, the average 30-year fixed-rate mortgage hit 6.3% on Thursday, the highest borrowing cost since November 2008.
Federal Reserve Chair Jerome Powell said during a Wednesday news conference that the rate hikes will "very likely" cost people their jobs, according to Politico.
“These are the unfortunate costs of reducing inflation," he said. "But a failure to restore price stability would mean far greater pain."
Wells Fargo CEO appears before U.S. House, Senate committees
Meanwhile, lawmakers grilled Wells Fargo CEO Charlie Scharf during House and Senate committee hearings with banking leaders this week. Sen. Sherrod Brown asked Scharf if the bank was "too broken to fix," according to the Charlotte Observer.
Brown cited a range of scandals, from an investigation into the bank's practice of creating fake accounts in customers' names to a recent Bloomberg report alleging racial discrimination in Wells Fargo's home lending evaluations.
"I'm very confident that we have made changes which will enable us to put all of our historical problems behind us," Scharf said during Thursday's hearing. "We have a new management team. We've changed our processes."
Shares of Wells Fargo's stock traded at $39.92 on Friday afternoon, down 8% on the week and 21% for the year. The bank employs about 13,000 workers in central Iowa, according to the most recent figures supplied by the company.
This article originally appeared on Des Moines Register: Wells Fargo lays off more Des Moines workers in the 10th round of cuts