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Interesting. This kind of resembles the crisis of 2008, when banks have produced too many subprime loans. It looks like WF tries to get them off their books while it still can. Or at least not make new ones.

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Not in any way does this resemble 2008. WF is not originating new loans because essentially all consumers suddenly have terrible looking credit and WF doesn't want to take on that risk.

Consumers have normal looking credit because the credit scores are lagging behind. It's smart to wait until the credit scores actually reflect reality instead of showing a rosy picture right before everyone starts defaulting at the same time.

I think we agree but I was less clear than I could have been in the grandparent comment. When I say "consumers suddenly have terrible looking credit," I don't mean FICO credit scores. Those remain, as you suggest and I agree, mostly unaffected, as they are a lagging indicator.

Banks are not fools, however, and they understand that there is more to consumer credit risk than FICO scores, especially in this kind of turmoil and economic contraction.

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