Wells Fargo falls on its face, taking its small business customers with it this time

Wells Fargo, the bank with all the office space and ugly logo, failed to develop a loan processing system in time to allow any of its small business customers to apply for the Payroll Protection Plan authorized by the Small Business Administration (SBA).  Now, like every other major bank, it's been sued for prioritizing PPP applications to favor the applications with the largest fees (or worse). Double whammy--they didn't get organized in time to participate, and they're still getting sued for doing it wrong.

Sympathy for an archaic dinosaur aside, these failures will bankrupt many Wells Fargo customers and result in immediate layoffs that were avoided by customers of many small local banks and other processors.

Here's what Wells Fargo has to say about their failure:

“We at Wells Fargo screwed up and made things worse for you than they already were. No other financial institution screwed this up as badly as we did, and we grovel with apology.  Because we screwed up so thoroughly, we’re sending you your Payroll Protection Program loan funds now. They're available in your corporate checking account so you can continue to pay your employees, as mandated by Congress. We've financed this loan ourselves since all the government funds ran out by the time we built our loan application applet. How can we fund your SBA loan? We've eliminated all payments to our 29,781 VP and above executives for the next 143 months.”

In parallel with the Wells Fargo confession of guilt, the bank rolled out its new corporate tag line:

Wells Fargo: If You Have a Problem, We Exacerbate It!

Ha.  As if.

Here's what Wells Fargo actually sent to me, David Foster, the CEO of Business Valuation Resources, and to all the other businesses they've ruined (highlights are the particularly odious parts):

Update on the Paycheck Protection Program

We are doing everything we can to help our small business customers navigate this difficult and uncertain time. In that spirit, we want to keep you updated about your application for funding through the Paycheck Protection Program (PPP).

Wells Fargo continues to process PPP applications. Over the past week we have mobilized hundreds of Wells Fargo employees and launched new automation and technology to enable us to process more applications at a faster rate.

You may have heard that the U.S. Small Business Administration (SBA) has run out of money to fund PPP loans, and we realize this may be causing you frustration and concern. Given the magnitude of the crisis the country is facing, we are hopeful that Congress will approve additional funds for the PPP. In anticipation of additional approved funds, Wells Fargo continues to prepare customers' PPP loan applications to be ready for submission to the SBA if and when this occurs. Of course, our ability to fund additional amounts depends on Congress continuing the program and providing additional funds for PPP loans.

What this means for you
We continue to prepare your PPP loan application for submission to the SBA based on the information you provided.

What happens next
We will continue to keep you updated on the status of your application by email.

If you haven't done so already, please complete and return to us any documentation we've already requested from you. This will ensure your application is ready to submit to the SBA, as quickly as possible, if they start accepting applications again.

Since all applications are being handled online, our phone and branch bankers unfortunately will not be able to provide updates on the status of your application.

These are truly unprecedented times that we know are impacting both you and your business, and we will continue to partner with you throughout this crisis. 

Final comment: many local banks have funded their PPP applications as required.  How did they succeed?  The did it manually.  They didn't throw tech at the problem.   Wells Fargo seems to have forgotten that tech is NOT the answer for every problem.   It took them three weeks to build the form needed to even apply.  By then, the SBA money was gone, employees had been laid off--and businesses had failed.

 (The Wells Fargo app, when released Wednesday afternoon after the money was gone, did not match PPP regulations and was full of errors.)

It should be mentioned that Wells Fargo was the least well positioned financial institutions at the start of this crisis; Wells Fargo was the only bank under federal criminal loan cap regulation.  Why?  Look back to 2009, when, you guessed it, Wells Fargo took its usual leadership role in creating crappy mortgages. Leadership then, leadership now.   Wells Fargo Bank.