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Due to "pervasive consumer abuse", the Federal Reserve prevented Wells Fargo from developing its assets, which hampered loan growth. According to Peabody, Wells Fargo is the only bank that has not significantly improved its results after the tax cuts of the administration.
This is happening despite a US economy that is growing at the fastest pace in a decade. Inventories are at record levels, unemployment is at historically low levels and interest rates are rising. These are ideal conditions for banks, which take deposits and make loans, pocketing the difference in interest rates on products.
J.P. Morgan Chase, the largest US bank, said it opened branches in markets where it was not already present. Asked about the threat that technology poses to banking jobs, CEO Jamie Dimon said he expects the workforce to remain stable as new jobs are created.
In the second quarter, Wells Fargo was the only major US bank to record lower sales than last year and had the worst efficiency ratio of 66.7%. The metric, followed by analysts and investors, measures how much the expenses consume revenues, and the lowest, the better. Competitors, including J.P. Morgan, were nearly 10 points better than Wells Fargo.
Peabody believes that once legal and regulatory oversight is lifted and the bank is able to resume growth, the US could face a recession. This leads him to a conclusion: Sloan's work is in danger.
"I think they're going to have a hard time increasing their incomes," said Peabody, "and Sloan is going to have a hard time surviving in the next few years."
The bank has denied recent rumors this week that former Goldman Sachs executive Gary Cohn, a former Trump economic adviser, could replace Sloan. Betsy Duke, chair of Wells Fargo's board of directors, said in a statement that the CEO "has the unanimous support of the board and that this support has never wavered."
After the announcement of the cuts, the bank was probably hoping for a boost in its stock. By the end of Thursday's session, stocks had climbed just 0.6%. At the same time, as interest rate increases boosted the entire sector, J.P. Morgan's shares ended the day up 0.9%.
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