Wells Fargo Can Grow Again & Google Sounds Alarm on Salesforce Hackers
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, after seven years of sleeping in the garage, Wells Fargo gets invited back into the house. Then hackers have been using a sophisticated voice phishing operation to steal customer data from retail companies. It's Thursday, June 5th. Let's ride. ♪

Happy Switch 2 release day! Nintendo's highly anticipated follow-up to its best-selling Switch console hit websites and stores around the world at midnight, and if you do not have one in your hands right now, you might be out of luck. Walmart, GameStop, and BJ's have apparently sold out of their

inventory, at least online, but they and Target say they'll have limited stock in physical stores. Over in Japan, the frenzy is even bigger. About 2.2 million people in that country alone entered a lottery system to secure a pre-order, and that was after imposing rules like you needed to log 50 hours of gameplay on the Switch to

even participate. Toby, find someone who looks like you the way Nintendo fans look at the Switch 2. They are coming out in droves for this thing. A Verge writer who lives in a town with a population of just 65,000 people documented his experience waiting in line to get his Switch.

Nintendo Switch, and he said his local Best Buy had a line 400 people deep before the Switch even came out. That is some crazy demand. Nintendo expects to sell 15 million units in one year, but you might want to take the over on that. It's great news for electronics retailers, too, like BJ's, like Walmart, like Best Buy. It's their Super Bowl. They're having all these people come out in droves if the Super Bowl only happened once every eight years.

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After more than seven years on the Federal Reserve's naughty list, Wells Fargo is finally free. Starting this week, the Fed lifted its asset restrictions on the bank, ending a rare and long-running penalty that had stunted its ability to expand and cost the bank an estimated $39 billion in profits.

This saga dates back to 2015 when Wells Fargo was the belle of the banking world. Its rise to become the country's most viable bank was fueled by a high-pressure sales culture where compensation was tied to revenue goals. But aggressive sales targets ultimately incentivized employees to open around 3.5 million fake or unauthorized customer accounts from 2009 to 2016.

What followed was an unprecedented tidal wave of regulatory crackdowns, the harshest being the Fed imposed asset cap that barred the bank from growing its balance sheet beyond $2 trillion until it was able to clean up its act. It took a while, but Wells Fargo has gotten its act together under a new CEO, Charlie Scharf, earning the Fed's blessing to get back to business as usual. That means the now fourth

largest bank in the country, can freely take deposits, make more loans, and look into acquiring companies once more. Neil, this has been a long comeback for Wells Fargo that has involved rebuilding its tarnished reputation and fixing deep-rooted cultural issues at the bank. Now we'll see if it has any gas left in the tank after years of being stuck in neutral because it sure has a lot of ground to make up. I mean, observers say this was the harshest penalty ever doled out on Wall Street, capping your growth. And it really did cap growth

Wells Fargo's growth because over the years when it was under this penalty, banks grew immensely. Average annual deposits at U.S. banks grew by more than a third from 2019 through 2024. Meanwhile, Wells' average annual deposits, because it couldn't grow them, were just up

over that same timeframe. Remember, this was when the Fed issued unprecedented amount of stimulus during the COVID-19 pandemic. This was the 2023 regional banking crisis when several smaller midsize banks went under and JP Morgan and the bigger banks were there to swoop in more deposits. Wells Fargo missed out on all of that. And now it is far behind the

Its trading revenue investment banking fees last year were about the same as what JP Morgan earned from those same businesses in just the fourth quarter alone. So it's got some catching up to do, but it does seem like in a prime position to be now one of the more profitable banks on Wall Street now that it has its ducks in order. I do just want to go back to when this punishment was handed down. An analyst at Piper Sandler said it was almost like a ghost story you would tell children to scare them, but not something you'd actually see in practice. This asset cap was just a very sensational

scary thing. And initially actually it was thought to be maybe this quick undertaking where Wells Fargo could get its act back in order relatively quickly. And actually after the, uh, punishment was handed down, some analysts actually upgraded the stock because they thought it would be done and dusted within the year. It drew on much longer than that. More and more things started coming out about how rotten the Wells Fargo culture was. Uh,

They got hit with a $1.7 billion fine from the Consumer Financial Protection Bureau as well for how they were handling mortgage and auto loans. So it was just this whole thing where they needed to switch the culture out, stop incentivizing these employees to fabricate these customer accounts, and just get back to becoming a bank that people could trust once more. And so it's taken seven long years, but they're finally back to the point where they feel like they can –

reset and start growing their business again. - And the prognosis looks pretty good if you listen to Jamie Dimon, who's the JP Morgan CEO. He actually handpicked the Wells Fargo CEO Charlie Scharf out of college to be his protege. He worked with Dimon to build what is now the modern JP Morgan, the biggest bank in the world. Charlie Scharf then went to Visa where he doubled that stock price in four years, then he went to BNY Mellon, and then he went to Wells Fargo for this cleanup job

So he is going, he has been in the background perhaps of Wall Street CEOs just because he's been mopping the floors for seven years. Now he's ready to hit the stage. He's 60. And Jamie Dimon said, I'm very bullish on Wells Fargo. This is not only good for Wells Fargo, but for the industry overall. But you have to think in the back of his mind, he's saying, well, we have a serious competitor now to deal with. Yeah, I do think that the biggest thing that Wells Fargo can do now to get back on its feet is cut down some costs. The bank,

had hired 10,000 employees across its risk and control groups to try to address some of these regulatory issues. So last year, it spent $2.5 billion more on those groups compared to 2018. So they can finally trim that headcount down. They don't need so many people working on these regulatory issues, and they can actually start making money for the business instead. Moving on, honk if you need rare earth minerals. Global automakers are

leaning on their horns to get anyone to pay attention to an impending crisis, they're going to have to pause production at plants in the coming days and weeks because they're running out of the magnets made by rare earth minerals necessary to make cars. This impending manufacturing catastrophe began back in April when China halted exports of rare earth magnets, a key input for literally every piece of advanced electronics in the world, cars, planes, cell phones, robots, data centers, weapons,

If it has a motor, generator, or sensor, it requires a magnet made by rare earth minerals. The problem is that China has a stranglehold on these components, controlling more than 90% of the market, and the Chinese stopped shipping those internationally two months ago, reportedly in retaliation for Trump's tariffs. Now, companies' stockpiles are

dwindling and without new supply, they say they're going to have to shut down factories imminently. The rare earth shortage would be most devastating to the auto sector, the largest buyer of these magnets. Without the magnets, they simply can't make cars and would have to send workers home and turn the lights off. It's

already happening. Last week, Ford temporarily closed its Ford Explorer SUV factory near Chicago due to a lack of magnets. Toby, shades of the 2021 chip shortage here that devastated auto production. Are there any workarounds? Yeah, the workaround here is you need rare earths. China is not sending you them. So what do you do? You go and set up manufacturing for auto parts in China. You start building your engines online.

over in China, which is diametrically opposed to the Trump administration's goal of reshoring American manufacturing. But when you have such a critical component of the supply chain being kind of constricted by China, you're going to have to get creative with it. So one option is you literally just...

start building engines over there. Another option, which is just a horrible option, is you partially finish an engine, send the whole engine over to China, have just a dime or nickel-sized rare earth magnet installed, and then send that back to the U.S., which again is not cost-effective, not efficient whatsoever. So these workarounds are pretty much working

Very much against the U.S. administration's goals of trying to bolster auto manufacturing inside our borders. And it's just incredible what these magnets go into. It's literally everything. There are as many as 12 magnets in a single luxury car seat. They're also in high-end speaker systems. So it's potentially, you know, car...

automakers could just say, okay, well, we can't make, you know, souped up cars anymore. You're not getting adjustable seats. You're getting downgraded speakers because we just simply can't make these cars with the necessary requirements because we don't have magnets. So they are pleading. And it's not just the United States, uh,

European automakers have also had to idle factories over the past few weeks because China's halted these shipments, not just to the United States, but all around the world. So they are pleading with China to open up these shipments back. But it just goes to show how incredible a

hand china has in this trade war because i mean there's nothing more powerful than holding these magnets because they are the entire world's achilles heel without them you can't make a single piece of advanced electronics yeah and that's maybe what will happen is that you'll start downgrading your electronics one option is to revert back to older electric vehicle motor technology which is less efficient and less cost effective but doesn't rely as much on rare earth magnets so that's not a great solution

And the other solution is just produce more gas-powered cars, which also necessarily isn't great for companies who have fuel economy standards to try to meet, emission standards to try to meet. So they are between a rock, a hard place, and a rare earth mineral. And right now, China does hold all the cards.

Google's threat intelligence group is sort of like an IT department for the whole internet, and it just issued a warning telling companies to be on the lookout for a sophisticated hack hitting 20 businesses across the US and UK in recent weeks. A hacking group has been impersonating IT personnel in tricking people into revealing login info or installing a copycat malicious version of a Salesforce tool.

So far, the network has attacked 20 companies, mostly by calling up employees, pretending to be their friends over at IT support, and nicking some sensitive credentials in the process.

Google's report didn't name specific companies, but it follows a rash of reports from Adidas, Victoria's Secret, Cartier, and North Face that they've been facing cyber attacks in recent weeks. Now, if you're a frequent Salesforce tool user, don't be alarmed. The issue isn't tied to any inherent vulnerability in its software. It's more tied to inherent vulnerabilities in humanity software as the hackers have relied on voice phishing campaigns,

and social engineering to gain access to customer info. So, Neil, Google has put out the bat signal here to remain vigilant as these hacks keep coming and they don't stop coming. I mean, these retailers are taking a massive hit from these hacks. Marks & Spencer, which is a UK retailer, expects to lose...

$400 million in operating profit because it can't sell anything online. It's been going on for weeks and it doesn't expect its e-commerce site to get back up until July. So that whole area of its business is just completely offline. Victoria's Secret website had been offline for multiple days. It just got it up recently, but it just lost millions of dollars in sales. Retailers are

kind of a sitting duck in the cybersecurity space. They are very ripe for hacking. They're going to target any industry with high transaction volumes, which retailers have. They have tight margins as well. So they're not going to maybe invest in cybersecurity the way other companies would. And they just have tons of customer information because what do you do every single time you buy something? You type in all of your personal information so they can send it to you and you give them your credit card information.

So retailers are just kind of sitting there ripe for hacking. And Google's putting out this call saying, stay vigilant. But the damage is already done. And the issue here, too, is that it's not easy to get these hackers out of the system once they've gained access through legitimate credentials. And so you are seeing companies literally turning things off and turning them back on again, like Victoria's Secret, who had to take their website down because you can't necessarily fix things. You have to

stop attackers from getting deeper into your network. So you oftentimes do just shut down and totally delete systems basically to reset and build them back up. So yeah, it is a massive headache because hackers are not easy to get rid of once they've wormed their way into your business. Up next, we got Neil's Numbers.

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Welcome to Neal's Numbers, the segment where I share three stats from the week's news that will have you going, well, actually, to your friends all weekend. My first number is the fastest growing millionaire hub in the country. Think you know what city it is? Scottsdale, Arizona. According to a new report by Henley and Partners, the bachelor party capital of the United States is also home to the fastest growing millionaire population of the United States.

Thank you.

Scottsdale also has leisure amenities loved by wealthy retirees like sunny weather, an infinite number of places to get plastered, resorts and elite golf courses. But perhaps just as interesting as Scottsdale topping the list is noting which city was replaced, Austin, Texas. Last year, Austin was named the fastest growing millionaire hub in the country. However, it's not even in the top five this year. Texas's capital boomed during the pandemic as a number of tech companies opened up

offices there, but it's lost some of its luster due to the tech slowdown and more competition from places like Scottsdale and Tampa. You can see this playing out in the luxury home market during the time period studied in the report about one in four homes in Austin was listed for $1 million or more compared to the more than 50% of properties listed for $1 million or more in Scottsdale. Toby, a Phoenix suburb is rising. It is rising right now and it does

have a lot of millionaire residents, 14,800 by Henley and Partners estimation, which is solid. That's more than West Palm Beach, which was second place over the last decade with 112% growth in high net worth individuals. But then if you just zoom out and you look at the true concentrations of where millionaires actually live, you look at the Bay Area, which came in at number three on the list, which is so impressive because that

The Bay Area has 342,000 millionaires who live there, 82 billionaires, 756 centi-millionaires as well. So just in terms of the scale, that's a lot of Scottsdale's worth of millionaires that are living in the Bay Area. It is. This report measured the fastest growing ones, and Scottsdale is truly rising. What is not rising besides Austin, Texas, is the number of people

is Connecticut. Poor Connecticut. Greenwich and Darien, they were on these lists for many, many years, but they've completely dropped off the list entirely, and that's because people are just going to Florida. West Palm Beach was the second fastest growing one. Miami was number four. So you're seeing this exodus of richer people from Greenwich and Darien down to the east coast of Florida and the desert of Arizona.

My next number may explain why visits to your Nana increasingly include ripping a bong. U.S. marijuana use among people age 65 or older surged nearly 46% from 2021 to 2023, according to a new study in JAMA Internal Medicine. 7% of older Americans say they used cannabis in the past month, compared to 5.2% in 2022, 4.8% in 2021, and less than 1% in the mid-2000s.

The upswing can probably be explained by cannabis being legalized in more states, as well as the social stigma wearing off for taking cannabis to deal with chronic pain, stress, or other conditions afflicting America's seniors. Health experts are warning this increased use comes with risk.

After all, there's a lot more THC in cannabis nowadays than when boomers were toking up at Woodstock as teenagers decades ago. And in an editor's note accompanying the study, three geriatricians wrote that cannabis can complicate the management of chronic diseases, interfere with other drugs people are taking, and impair the senses and cause accidents. So more research into the benefits ahead.

and risks are needed. But one thing's clear, Toby, pot is just not for the youth anymore. It's not just for the youth. It's increasingly for older, richer women specifically, too, because the increase was more pronounced among women than men and was also more pronounced among adults with annual incomes

over $75,000. So it does really look like that stigma factor has totally changed. And now, you know, these older women are just kind of sitting on their porch and smoking some weed, whether medicinally or recreationally. It is not just for the youth as well, because there was this other survey that found that cannabis use in the U.S. has been increasing, but not actually amongst teenagers. This research looked at data on more than 500,000 people's cannabis habits,

during different time periods from 2013 to 2022. And teenagers was flat while everybody else's cannabis use was growing as well. So it is this fascinating thing where it is making its way upwards in the age ranks and staying the same or even dwindling amongst the youth.

My final number is a listener submission from Valeria. So you have her to thank for this one. And she alerted us to the fact that Sherwin-Williams, the paint company, has begun to spotlight its loneliest hue of the year, meaning the hues that were the least popular among customers. For 2025, that hue was Radiant Lilac SW0074. Despite being a rich, inviting purple, Radiant Lilac had the fewest gallons sold of

any hue in the Sherwin-Williams portfolio last year. Out of the millions of paint gallons the company tints per year, there were less than 1,000 gallons of Radiant Lilac made. Design experts say it's probably because homeowners are a cautious bunch and purple is a bold choice that's hard to pull off. Like, if you do purple wrong, people may never come over your house again. Still, the folks at Sherwin-Williams think Radiant Lilac shouldn't scare you off if you are thoughtful about it. This hue works really well if you're going for a 70s retro vibe.

Yeah, I don't like this color at all.

I love it. A lot of designers kind of, once this press release came out, started saying how they would use it. And some of them said Radiant Lilac is terminally outdated. Obviously, it's very intimidating too to try to put this outdated color in multiple places. Also, it's just not trendy at all right now. These kind of pastel shades are very much out. There's very much...

more of a focus on these natural organic tones, deeper greens, deeper browns, et cetera, and Radiant Lilac just doesn't fit at all with that. The other color story that we've talked about on the show before, though, is Pantone names a color of the year each year, and this year it's Peach Fuzz.

And so I started looking at color theory and Peach Fuzz and Radiant Lilac actually pair quite well together. They're both sort of muted. Their low saturation levels help them blend without clashing. Also, it's a nice warm and cool balance. So you can take the most popular color of the year and the least popular color of the year and actually make some magic out of that. And I kind of like

that that is the case here. I'd probably need to call up a professional because those two together, oh my God, it would be a disaster. Okay, let's sprint to the finish with some final headlines. The hits keep coming to President Trump's big, beautiful bill. The nonpartisan Congressional Budget Office calculated that the massive tax cuts and spending package

would add $2.4 trillion to U.S. debt by 2034, giving more ammo to critics like Elon Musk, who say the bill would bankrupt the country for future generations. Specifically, the bean counters at the CBO found that the bill would cut spending by $1.3 trillion in the coming decade, but reduce tax revenues far more than that, $3.75 trillion. It would also cause the number of people without health insurance to rise by 4%.

$10.9 million from cuts to Medicaid. The new figures may dim the bill's chances in the Senate, where it can't lose many Republican votes, but some GOP lawmakers already say they're voting against it, with Senator Ron Johnson yesterday calling the bill immoral and grotesque and demanding changes.

Yeah, the Trump administration has kind of repeatedly dismissed this CBO estimates. They're saying it's inaccurate because they're saying it doesn't account for any boost to the economy that the bill might create through these tax cuts, which could offset some of those revenue losses. I mean, Treasury Secretary Scott Pesent said last month,

I'm not worried about the U.S. debt dynamics because a swelling GDP will ease the burden. So he's projecting higher growth can help offset some of these things. But yeah, this bill narrowly passed the House last month. It now faces a lot of opposition in the Senate. It's probably going to look like a totally different bill by the time it gets out there. But the CBO is one other data point.

that critics can take and say, hey, this is going to increase our debt too much. We don't necessarily want this. We want to do more for deficit reduction. We don't want to add to the deficit.

President Trump also announced a travel ban on 12 countries yesterday and a partial ban on seven others, saying it was necessary to bolster national security and combat terrorism. The ban will fully restrict citizens from the likes of Afghanistan, Haiti, Iran, and other mainly African nations, while Cuba, Turkmenistan, Venezuela, and others will have a partial restriction.

The White House says that the countries targeted by the ban either have high visa overstay rates or don't adequately vet or share security information about their citizens when traveling to the U.S. The proclamation won't apply to current visa holders, lawful permanent residents, or travelers coming to the U.S. for the upcoming World Cup or Olympics, though organizers have grown increasingly uneasy about Trump's immigration policies.

Neil, this is likely to face legal challenges, just as a similar order did from his first term. But until then, the travel ban is set to go into effect on Monday the 9th. This is a little different than the last time they did this. Seems like they have their legal ducks a little more in order. Trump, one week into office, ordered this travel ban from majority Muslim countries. And it was, remember, it was chaos at the airports. No one knew what was going on because it was implemented illegally.

so hastily that went through years of litigation. The Supreme court upheld the legality. Once the Trump administration provided justification for it, it looks like they're taking their time and getting, uh, their legal ducks in a row so that it will survive more legal challenges here. Of course, human rights advocates are still upset about this, especially from places like Sudan, which is engulfed in a civil war. And you have people who are leading, uh,

Sudanese human rights organizations saying it was just another indication of the Trump administration being inconsiderate to the suffering of those people. So yes, it may face legal challenges, but it's not like the first time with all of that travel chaos we saw at airports and other ports of entry for the United States.

Finally, imagine getting an evacuation notice because authorities found World War Two bombs in your neighborhood. Well, that was the reality for residents of Cologne, Germany, yesterday, when more than 20,000 people were evacuated from part of the city so that specialists could come in and defuse three unexploded U.S. bombs from World War Two. They discovered earlier this week.

It's not particularly rare to find World War II bombs in cities around Germany 80 years after the war ended, but an evacuation of this scale was the largest since 1945. The city basically had a snow day since the evac area contained 58 hotels, nine schools, a couple of museums, and office buildings. The good news is that the three bombs were successfully diffused. That is the good news, but the

Bad news is that more than a dozen couples that were scheduled to have their wedding at Cologne City Hall had to relocate their ceremonies. Can you imagine you plan this for this big old day and then they find unexploded World War II bombs and you have to reschedule everything? It's a good story. It is a good story, but that sounds like a nightmare right there. I didn't realize how prevalent this was. 1,500 to 2,000 unexploded World War II bombs are found every year in the North...

the North Rhine-Westphalia region, which is where Cologne is located. So this is not an unusual occurrence by any means. It is unusual occurrence to have them just so close to a city center in a population center like Cologne. So very tough story for your wedding guests though, to say like, sorry guys, this wedding is literally off to a bad start because some bombs were found.

All right, that is all the time we have. Thanks so much for starting your morning with us and have a wonderful Thursday. If you have any thoughts on today's episode, send an email with questions, comments, or feedback to morningbrewdaily at morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup is standing in line at GameStop. Devin Emery is our president, and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.

Oh, hello, Morning Brew Daily. It's Money With Katie here. When I first started learning about money, I heard all about the best practices, right? Spend less than you earn, max out your 401k, pay off high interest debt, all good advice. But

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