FAST FIVE: Wells Fargo Is Selling Its $10 Billion Student Loan Book
the bank desperately needs to either issue higher margin loans or somehow unlock balance sheet space to issue debt that results in a higher yield.
The corporate-trust process is ongoing and Wells Fargo is handling the potential divestiture itself, one of the people said, asking not to be identified because the talks are private.
The San Francisco-based bank is also exploring a sale of its $607 billion asset manager and expects to receive bids by the end of the month, as reported last week.
Some speculate that Wells' decision to sell its entire student loan business is confirmation the bank is scrambling ahead of what may be uniform loan forgiveness by the Biden administration (Liz Warren has been especially vocal on the topic) and the result would be major impairment for any private-sector issuer of such loans.
Alternatively, it may simply mean that the hurdle for the Fed to buy such student loans remains high and a far greater economic shock would be needed before banks can dump their exposure to the central bank (at par or higher).