Wells reported net credit losses of $892 million, up 35 percent from a year earlier. About half of the increase stemmed from home equity loans, where lower housing prices caused steeper than expected losses, Chief Credit Officer Mike Loughlin said. There is a way to increase profits, however, and Wells Fargo found the way.

The answer is cross-selling and increased fees. While nobody is happy with increased fees of any kind it banks don’t seem to care. I recently stopped at an ATM machine but went to a different bank because the ATM fee would have been $3.50. All the other banks in our town increased their ATM fees to $2.50. Cross-selling can be an annoyance, but almost all contracts allow it. You must opt out.

Subprime lenders such as HSBC are the ones you really need to watch out for. Cross-selling sounds good, with well polished literature and practiced telemarketers. However, if your payment is mailed two weeks early and credited one day late (see horror stories) there is no upside for the consumer. What many people fail to realize is the contract also includes a binding arbitration clause. Will you spend $5000 on arbitration to dispute a $39 late fee that is obviously wrong? What about the impact on your credit report? Is the lender trying to reduce your credit score to you must take out a subprime loan? These and many other questions address the foundation of subprime problems seen today in America.