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Leader of the Payday Pack: Wells Fargo

Adam Rust's picture

Posted April 22, 2013

Fringe lenders know who to go for when they need a loan: Wells Fargo.

For the last few years, no other lender has been nearly as keen as Wells when it comes to making deals with payday lenders, rent-to-own stores, tax preparers that offer

refund anticipation loans, Buy-Here Pay-Here car dealers, pawn shops, or subprime debt collectors.

Wells is so aggressive in this space, in fact, that their involvement over the last several years exceeds the next closest bank by more than twofold.

Here is the list of the top 10 participants in fringe lending:

Wells Fargo has given fringe lenders more than $1 billion in loans in the last seven years.

To explain discrete versus shared: discrete references the sums of loans made where SEC filings give specific amounts by individual banks. Commonly any piece of financing will involve a consortium of lenders. Usually one bank takes the lead on collecting and distributing payments, but lenders are identified as well. Shared refers to instances where documents only give names of lenders and then the total amount of the financing packaging. Thus, those "shared" amounts are only an assumption: it divides the total debt by the number of named lenders. In all likelihood, Wells' contribution is higher because it is usually one of the top lenders in any deal.

Wells could argue that they are above making these kinds of loans, and on a technical level that might be true. With the exception of branches in the states where the bank offers the Direct Deposit Advance, Wells stays away from offering high-cost loan products to their customers. Nonetheless, they are still making lots of money from these businesses. In fact, those businesses could not exist on the scale that they do were it not for the generosity of the kind bankers at Wells.

Holding a meeting in Utah

Wells Fargo is going to hold its annual meeting tomorrow. Traditionally, they company entertains its shareholders in San Francisco. This year, the get-together is going to take place in Salt Lake City.

Salt Lake is an unusual choice. Perhaps the choice reflects that possibility that Wells will need to take advantage of the city's famously wide streets. The city founders intentionally shaped those streets to make it possible for a team of four oxen to make a u-turn. That could come in handy if you came in a stagecoach.