Shareholders are cheering the deceptive “Wells Fargo comeback story” as Charlie cuts costs, cuts corners, cheapens products and services, slashes headcount, sells off profitable business lines, offloads sensitive work to outside vendors and third-world countries, closes hundreds of branches, pulls out of cities, degrades the quality of our investment advice and research, eliminates experienced knowledgeable staff and disturbingly backs out of simple classic banking activities such as mortgages.
Will investors still love the stock when they see the end results of his inherently flawed business strategy? When shareholders realize the aggressive cost-cutting has jeopardized the quality and safety of our services, reduced customer satisfaction, and that most other banks are growing their services rather than decimating them - is WFC still going to be a Buy? They think they’re investing in a Lexus, but it’s an exploding Pinto in disguise.
Wells Fargo cannot save its way to prosperity. The bank is following a short-term path with poor long-term results. I’ve always appreciated the old adage: “You can make a pizza so cheap, nobody will want to eat it.”