Wells Fargo & Co.’s new limitation on the dollar volume of subprime originations in its portfolio — revealed in a published report yesterday — is more of a formality than a tightening of the bank’s subprime lending, a Wells Fargo Dealer Services spokeswoman told Auto Finance News this morning.
“We are as committed as ever to the auto finance market and remain firmly committed to responsibly offering access to credit to a wide spectrum of customers during all economic cycles,” the spokeswoman said in an emailed statement. “The percentage of originations we consider subprime, based on our customized scorecard, has remained generally stable over the last decade. In the fourth quarter, we formalized our existing risk management philosophy. This is part of our ongoing risk-management structure and helps us to continue to responsibly manage risk while also tailoring our approach by local market.”
Wells Fargo made headlines yesterday when bank executives were cited in the report saying that the bank is limiting the dollar amount of subprime originations to less than 10% of its overall volume.
Wells Fargo’s originations dropped to $6.7 billion in the fourth quarter of 2014, from $7.6 billion in 3Q14, a decline Chief Financial Officer John Shrewsberry attributed in a mid-January earnings call to a commitment to risk management. “We continued to benefit from the strong auto market,” he said on the call. “New originations were down from a year ago, reflecting our continued risk and pricing discipline in a competitive market.”
