Is to keep Commercial Real Estate values afloat. WFC is the second-largest commercial real estate lender in the United States.
I look at Robinhood, Affirm, and think WFC is doing banking the way it was done in the 1980s.
28 replies (most recent on top)
@195 can't control what other people think. luckily in a situation like this it doesn't matter what anyone thinks.
@18t It isn't this particular topic that I'm "overly emotional" about, but, rather, one of America's biggest problems: immunity to empirical evidence. We could be discussing the dangers of smoking, the benefits of using seatbelts, climate change, renewable energy, public transportation, the decline in America's literacy rate, or any of at least a dozen other topics. In every case, Americans need to be dragged kicking and screaming into the future, if possible. But as is more often the case, the truth-teller is punished or at least ignored, and the country falls further and further behind its global peers while we wallow blissfully in our own ignorance.
I have posted links directly to news sources for you to examine yourself. I have explained how commercial balloon mortgages work and how they are coming due soon. I have explained how the major banks hold hundreds of billions of dollars of commercial real estate debt, and how Wells Fargo leads the pack with nearly $140 billion in CRE debt. I have explained how commercial real estate leases are expiring in 2027 and 2028. I have explained that business leaders have admitted that making better use of paid-for office space is a core reason they’re mandating in-person attendance. I have explained that when Wells Fargo, JPMorgan Chase, and other Wall Street giants mandate strict return-to-office (RTO) policies under the banner of "collaboration" and "corporate culture," they are protecting their balance sheets. I have explained that they cannot publicly state that empty cubicles directly threaten their solvency, but that the financial mechanics of their real estate exposure dictate their human resources policies. I have explained how the megabanks do not just occupy real estate; they finance it, and that when a bank like Wells Fargo looks at commercial real estate, it is vulnerable on two completely different fronts:
They own millions of square feet of prime office space and hold multi-decade corporate leases signed pre-2020, and leaving these buildings empty results in massive asset write-downs and wasted lease expenses. But they also hold tens of billions of dollars' worth of commercial mortgages and that if other corporations default on their office buildings, the banks inherit heavily devalued properties, forcing them to gradually charge off problem loans at a massive loss. I have explained how when these loans expire, landlords have to refinance them at significantly higher interest rates on buildings that are worth a fraction of their original purchase price.
I have explained how by mandating full-time RTO, banks are attempting to artificially prop up downtown building occupancy to justify those valuations before the refinancing crisis forces widespread defaults.
Also, you don't need to take my word for it; you can research these things for yourself. It's all over the innerwebz.
Yes, it's true that an added advantage to RTO is that many people will quit, making severance packages less of a concern for many boards of directors. Outsourcing and AI are key drivers behind the downsizing epidemic, placing large banks like Wells Fargo in a unique double-whammy predicament in which they are trying to reduce expenses with layoffs without accelerating their CRE exposure.
But I mean, go ahead and believe whatever you want. As an American, you are entitled to your own facts. Evidence doesn't matter, only uninformed opinions.
@nr+1m49ymf0
You're overly emotional about this, and apparently unable to grasp the concept that every company in America isn't motivated by the same thing. Again, you can't remove 110,000 butts from seats and then claim that sending 35k butts to seats is an attempt to save the market. We're not saving anything. If anything, we're tanking it. I don't know why other employers are doing RTO, you could be completely correct about them. Not Wells Fargo. Sharts plan is to cut and cut and cut until there are no more butts in seats, outside of a few sales people. Their own bonuses are the only things they will ever prop up.
"So what?" - Charlie Scharf
@em great question. it serves no purpose. these two people arguing back and forth must not have anything better to do.
@nf "This week, the commercial real estate industry just said the part PM Carney is unwilling to say out loud: after years of lobbying and warnings about declining office values, RTO is now helping commercial office real estate rebound.
"In other words: the government knew falling office demand was a risk for banks, which CAPE National has seen from an internal document we received. And now, in the same week RTO4 started, the real estate industry is saying forced office returns are helping that same market recover. That timing should raise serious questions."
https://www.instagram.com/p/Dap7mekDQcC/
"The corporate narrative surrounding return-to-office has largely centered on soft justifications — enhanced communication, team cohesion, managerial convenience. Yet 40 percent of business leaders in the Resume.org survey admitted that making better use of paid-for office space is a core reason they’re mandating in-person attendance. That number climbs when lease agreements are considered directly. Among companies that lease office space, more than half acknowledged that those agreements are affecting their policy decisions, with 16 percent citing them as a major influence."
https://thehill.com/opinion/finance/5638850-office-leases-shaping-workplace-policy/
How many times must I present ACTUAL FU--ING EVIDENCE that plummeting CRE values are one of the motivations for RTO mandates?
"Oh, WF has employees in office? I guess I won't default on my loan then."
What you just said makes no sense whatsoever. The meager amount of properties we own is a fly fa-t in a hurricane relative to the cre market or the slice of it that has debt owed to WF. Additionally, per the executives, almost 100,000 WF employees never did WFH, and since we only have about 145k people left domestically and they are spread across the entire country it quickly becomes evident that the number of people we're talking about per location is not significant on a national CRE scale. Not even close. The action has NO ability to "slow the decline". I'm sure HY would love the businesses we have loaned money to to pay us back, but whether they do or not has nothing to do with our RTO program. It's nowhere near large enough and even if it was, downsizing a zillion employees demonstrates that they couldn't care less about a butt in a seat. Make it make sense that 45k butts in seats is mission critical for their grand wizard CRE prop up move...while they have also downsized over 110,000 people who will never sit in a WF seat again.
@f7 Yes, both things can and are true. Remember when Enron executives were issuing "strong buy" recommendations to the public whilst secretly selling off their own shares? Wells Fargo is selling their property before the value plummets even further whilst mandating RTO to slow the decline of the properties they are unable to dump. Why is this so hard to understand?
Both things can't be true people. If our butts are what is keeping the entire cre market afloat, then closing and dumping a ton of buildings at below market rates is the antithesis of "propping up the market". All signs suggest that HY believes our butts in seats have nothing to do with WFs CRE portfolio. Perhaps they think that RTO as a general rule across the economy is good for cre, but again, they ain't practicing that they preach. We've got over 110,000 less butts in seats thanks to HY. Tell me again how worried they are about the impact on cre of less butts in seats. Not buying it.
@dz Hope you get the anger issues sorted out. I stand by statement. Good luck with it. I'm happily retired and moved on with life.
why argue about the motives? does that serve a purpose that I'm missing? if the bigger motive is one or the other does that mean the RTO obsession might end one day?
@dx You are aware that two things can be true simultaneously, aren't you? If I'm saying that RTO is caused by the bank's desire to quell plunging CRE values AND it's a ploy to get employees to quit so they don't have to make severance payments, that's TWO BAD THINGS I'm accusing the bank of. So how is that "toting water" for them? RTO is motivated by TWO UNSCRUPULOUS ACTIONS, not just one, you blockhead. This is a good example of why the bank needs to rely so heavily on H1-B workers and also a good example of how pathetically cr-ppy the US educations system is. Merkins simply cannot follow the most fu--ing basic logic. Sheesh. If a criminal mu---rs someone AND robs them, do you say, "he ki-led him, he didn't rob him"?
Here is a free Introduction to Logic course offered by Stanford University. Please, for the love of all that is holy, TAKE THIS COURSE!
https://www.coursera.org/learn/logic-introduction
@da "Attrition is another reason, too, of course." Your statement. Not mine.
You just made my point. But keep toting the water for these clowns.
@d9 Do a simple Google search. RTO. IS. ABOUT. COMMERCIAL. REAL. ESTATE. VALUES. It's all over the place. Attrition is another reason, too, of course. But WF alone has around $140 billion tied up in commercial real estate, and remote work is making that property worthless. It's why they're selling off properties at fire-sale prices before the CRE market completely crashes. God, it's so obvious. Come on.
RTO was always designed to make current employees' lives total he-l and obtain attrition. It has nothing to do with real estate.
You think these elitist a--holes really want to see your shining face in the office? If you do, see me for investment opportunities.
@cw They also went on national news to tell us that RTO is about "collaboration," but we know that is BS, don't we?
@cw I just think it's funny that rudimentary logic is in such short supply that people are unable to connect RTO mandates with the well-documented plunge in commercial real estate values. People aren't "straining"; they're just using common sense. No large corporation is going to come right out and admit it publicly, but companies with large CRE exposure (Wells Fargo, PNC, U.S. Bank, regional lenders) have warned in earnings calls that remote work is “a headwind for office valuations." And state and federal governments have tied RTO directly to CRE stabilization. Info on this is all over the internet; again, it doesn't require any "strain" to find it. Look:
"Why the office mandates? For many companies, it’s all about real estate.
"The corporate narrative surrounding return-to-office has largely centered on soft justifications — enhanced communication, team cohesion, managerial convenience. Yet 40 percent of business leaders in the Resume.org survey admitted that making better use of paid-for office space is a core reason they’re mandating in-person attendance. That number climbs when lease agreements are considered directly. Among companies that lease office space, more than half acknowledged that those agreements are affecting their policy decisions, with 16 percent citing them as a major influence."
https://thehill.com/opinion/finance/5638850-office-leases-shaping-workplace-policy/
And once the lease crisis passes, we will see companies embracing remote work to reduce expenses. This is just common sense. No "strain" required.
I just think it's funny the CEO can go on national news and tell you directly what his goals are, and people still strain to find more complex explanations. Yes, the CEO class in general cares about CRE values, and that might be a factor, but a background one, in Wells' logic. But don't make it more complicated than it has to be. Charlie wants people quitting. That's reason enough
@bf you are right and this also happened in Charlotte, Minneapolis, San Francisco, and Dallas. Multiple towers sold, leases exited and employees moved into campus settings or fewer buildings. Des Moines wasn't unique.
@bj Don't under research it. Two things can be true at once. Or three, if you include the fact that shart is a mo--n. The bank's shareholders don't want to be on the hook for $140 billion. Even a mo--n can grasp that. I don't think many people realize how much trouble the country is in financially.
Don't over research it. Like others have stated. The goal of RTO is to frustrate employees so that they resign. Shartz is a one trick pony who would not have the mental capacity to calculate real estate values . You honest,y believe anyone below shartz actually believes in or trusts this mo--n?
Wells Fargo holds the largest absolute volume of CRE debt at roughly $139.7 billion. JPMorgan Chase holds approximately $132.3 billion in commercial property loans. Bank of America holds roughly $77.6 billion, according to Business Insider. The crisis is coming to a head because commercial real estate relies on 5-to-10-year balloon mortgages. Hundreds of billions in debt are maturing. Landlords who locked in 3% interest rates years ago are now forced to refinance at 7% or 8%, all while their office buildings are half-empty and worth 40% to 90% less than what they originally paid.
@bd In Des Moines, Wells Fargo has sold off all of their downtown commercial real estate and crammed their employees into their suburban Jordan Creek campus for this very purpose. The Jordan Creek campus has been remodeled to fit as many workers into the space as possible. And unlike downtown highrises, the Jordan Creek campus cannot easily be retrofitted into hotels or residential spaces. Wells Fargo was once one of the largest corporate real estate owners in downtown Des Moines, but their exit has been aggressive and calculated. Because the Jordan Creek campus is architecturally "locked" into being a corporate complex, it has zero liquidity on the open real estate market right now. No external buyer wants a million square feet of isolated suburban office space, and no developer can convert it.
Wells Fargo realized that while they could sell their downtown footprint to hotel and residential developers, they were stuck with Jordan Creek. The absolute only way to extract value from that multi-million-dollar asset was to remodel it, mandate RTO, and force the workforce into it to justify the sunk cost.
Yes, protecting commercial real estate (CRE) values and stabilizing corporate property portfolios is a major, well-documented driver behind many return-to-office (RTO) mandates. Companies, their board members, shareholders, and financial backers (such as pension funds and life insurance companies) often hold heavy stakes in office buildings; forcing workers back helps justify lease costs and prevents sharp asset depreciation. Many corporate leases signed before 2020 are locked in for years, and banks face high exposure to devalued office properties. Keeping buildings empty risks massive default and write-down scenarios. Industry analysts note that a major wave of commercial real estate leases (spanning hundreds of millions of square feet) will expire toward 2027–2028, leading some experts to predict that pure real estate pressures on RTO could shift once those contracts run out. The fact that WF has sold off property at a loss supports this theory, because they are trying to exit their CRE liabilities before the market completely collapses. Many corporations are aggressively shedding their own real estate liabilities while commanding employees to act as the consumer base that preserves the rest of it. Companies -- not just WF -- and institutional landlords are offloading properties at staggering, historic losses to completely exit these assets before massive loans mature. Attrition, of course, it another motive, but it's both, not either/or.
CRE is a complete non-factor. How do I know? WF has dumped a ton of buildings across the nation, most of them at significant loss, over the last 5 years. Shart is doing the exact opposite of what one would do if they were trying to prop up the market.
Shart has gone on national news multiple times talking about wanting to shrink "by attrition as much as possible." There's no need for conspiracy theories
goal is to get people to quit. not that it matters, i guess. no end in sight.