WFC - Wells Fargo

[walt373]

Quarter-end is coming up and there might be some selling due to window dressing. Is the scandal bad enough that some managers don't want to be seen with WFC in their portfolios? WFC and MYL with the Epipens were probably the 2 biggest recent scandals. I might be buying if it sells off.

[Uccmal]

What's the difference between this Wells Fargo issue and these stories that went unnoticed?

 

http://www.bizjournals.com/sacramento/news/2012/03/21/calif-walmart-overcharge-customers.html

 

http://fox5sandiego.com/2015/02/11/target-to-pay-4m-fine-for-overcharging-customer/

 

Saying the CEO should be fired is like saying the CEOs of Walmart and Target should have been fired for giving store managers sales goals.  When you incentivize anything, there will be unintended consequences.

 

I would guess they were not bailed out by American taxpayers in the recent past.

 

Wells was not bailed out. They were forced to take on TARP as a show of solidarity in the financial system. But of course, the politics of the day and the mainstream will obfuscate that fact.

What's the difference between this Wells Fargo issue and these stories that went unnoticed?

 

http://www.bizjournals.com/sacramento/news/2012/03/21/calif-walmart-overcharge-customers.html

 

http://fox5sandiego.com/2015/02/11/target-to-pay-4m-fine-for-overcharging-customer/

 

Saying the CEO should be fired is like saying the CEOs of Walmart and Target should have been fired for giving store managers sales goals.  When you incentivize anything, there will be unintended consequences.

 

I would guess they were not bailed out by American taxpayers in the recent past.

 

Wells was not bailed out. They were forced to take on TARP as a show of solidarity in the financial system. But of course, the politics of the day and the mainstream will obfuscate that fact.

 

And of course they didn't benefit from the bailouts, right.  Had the US gov't not bailed out the others Wells would have gone down too.  They knew it and did as they were told.  The whining was all Bs for the headlines. 

 

Anyway none of that is relevant to the facts at hand which is that Wells HAS BEEN badly managed by the higher ups.  They are over paid display dolls.  Dont forget that these were unforced errors.  They would have made the same sales without being a pain in everyones butt.

 

 

 

Quarter-end is coming up and there might be some selling due to window dressing. Is the scandal bad enough that some managers don't want to be seen with WFC in their portfolios? WFC and MYL with the Epipens were probably the 2 biggest recent scandals. I might be buying if it sells off.

 

It might be a good time to buy, but it isn't cheap enough for me yet.  Mind you the stock should pop when the CEO resigns, and the company makes some show of effort to get some pay back.

 

 

 

[Uccmal]

What's the difference between this Wells Fargo issue and these stories that went unnoticed?

 

http://www.bizjournals.com/sacramento/news/2012/03/21/calif-walmart-overcharge-customers.html

 

http://fox5sandiego.com/2015/02/11/target-to-pay-4m-fine-for-overcharging-customer/

 

Saying the CEO should be fired is like saying the CEOs of Walmart and Target should have been fired for giving store managers sales goals.  When you incentivize anything, there will be unintended consequences.

 

I would guess they were not bailed out by American taxpayers in the recent past.

 

Wells was not bailed out. They were forced to take on TARP as a show of solidarity in the financial system. But of course, the politics of the day and the mainstream will obfuscate that fact.

 

I think you might have missed the point that you eventually make in your own statement. Regardless whether they were forced  or not - they were important for the "financial system". Feds didn't shove billions down Walmart's or Target's throat and that's why what these Big Banks do gets amplified.

 

Precisely.  Everything was/is interconnected.  To that end they were required to participate, and should have been require to participate.  The nonsense that Wells management spouted at the time was self serving BS.  They would have gone under without the financial system bailouts.  So of course they willingly participated, probably quite happily, behind closed doors. 

[StubbleJumper]

What's the difference between this Wells Fargo issue and these stories that went unnoticed?

 

http://www.bizjournals.com/sacramento/news/2012/03/21/calif-walmart-overcharge-customers.html

 

http://fox5sandiego.com/2015/02/11/target-to-pay-4m-fine-for-overcharging-customer/

 

Saying the CEO should be fired is like saying the CEOs of Walmart and Target should have been fired for giving store managers sales goals.  When you incentivize anything, there will be unintended consequences.

 

I would guess they were not bailed out by American taxpayers in the recent past.

 

Wells was not bailed out. They were forced to take on TARP as a show of solidarity in the financial system. But of course, the politics of the day and the mainstream will obfuscate that fact.

 

I think you might have missed the point that you eventually make in your own statement. Regardless whether they were forced  or not - they were important for the "financial system". Feds didn't shove billions down Walmart's or Target's throat and that's why what these Big Banks do gets amplified.

 

Precisely.  Everything was/is interconnected.  To that end they were required to participate, and should have been require to participate.  The nonsense that Wells management spouted at the time was self serving BS.  They would have gone under without the financial system bailouts.  So of course they willingly participated, probably quite happily, behind closed doors. 

 

 

Al,

 

Just to be completely fair, if the weaker banks failed and the financial system collapsed, how many other companies unrelated to the financial services industry would have gone under?  It's all fine and dandy to say that WFC "owes" Uncle Sam some special consideration because the government prevented a financial system collapse in 2008/09.  But, can we not say the very same thing for Sears Roebuck, Walmart, and pretty much all of the consumer discretionary sector?  If the financial system had collapsed and US gross domestic product fell by 30% as a result, I'm pretty sure that the carnage would have been widespread.  Does Sears Roebuck owe Uncle Sam some sort of special consideration for its indirect bail-out in 2008/09?  What about Carnival Cruise Lines, do they owe Uncle Sam some sort of consideration for the benefits that they realised from the financial system bail-out?

 

The deadbeats were the ones who *needed* a direct cash injection as a result of the bad management of their particular enterprise.  Do not extend that category to include unrelated, well-run businesses.

[Ballinvarosig Investors]

Banks in Europe getting a walloping, so good chance we will see a new 52 week low today for Wells.

[alpha231616967560]

Wells Fargo Claws Back Millions From CEO After Scandal - http://www.wsj.com/articles/wells-fargo-board-actively-considering-executive-clawbacks-1474985652

 

Wells Fargo & Co.’s board said it plans to claw back $41 million in compensation from Chairman and Chief Executive John Stumpf as punishment for the bank’s burgeoning sales-tactics scandal, marking the first time since at least the financial crisis that a major U.S. financial institution has forced its top executive to relinquish previously earned compensation...

[Spekulatius]

What's the difference between this Wells Fargo issue and these stories that went unnoticed?

 

http://www.bizjournals.com/sacramento/news/2012/03/21/calif-walmart-overcharge-customers.html

 

http://fox5sandiego.com/2015/02/11/target-to-pay-4m-fine-for-overcharging-customer/

 

Saying the CEO should be fired is like saying the CEOs of Walmart and Target should have been fired for giving store managers sales goals.  When you incentivize anything, there will be unintended consequences.

 

I would guess they were not bailed out by American taxpayers in the recent past.

.

 

Wells was not bailed out. They were forced to take on TARP as a show of solidarity in the financial system. But of course, the politics of the day and the mainstream will obfuscate that fact.

 

I think you might have missed the point that you eventually make in your own statement. Regardless whether they were forced  or not - they were important for the "financial system". Feds didn't shove billions down Walmart's or Target's throat and that's why what these Big Banks do gets amplified.

 

 

 

Precisely.  Everything was/is interconnected.  To that end they were required to participate, and should have been require to participate.  The nonsense that Wells management spouted at the time was self serving BS.  They would have gone under without the financial system bailouts.  So of course they willingly participated, probably quite happily, behind closed doors. 

 

 

Al,

 

Just to be completely fair, if the weaker banks failed and the financial system collapsed, how many other companies unrelated to the financial services industry would have gone under?  It's all fine and dandy to say that WFC "owes" Uncle Sam some special consideration because the government prevented a financial system collapse in 2008/09.  But, can we not say the very same thing for Sears Roebuck, Walmart, and pretty much all of the consumer discretionary sector?  If the financial system had collapsed and US gross domestic product fell by 30% as a result, I'm pretty sure that the carnage would have been widespread.  Does Sears Roebuck owe Uncle Sam some sort of special consideration for its indirect bail-out in 2008/09?  What about Carnival Cruise Lines, do they owe Uncle Sam some sort of consideration for the benefits that they realised from the financial system bail-out?

 

The deadbeats were the ones who *needed* a direct cash injection as a result of the bad management of their particular enterprise.  Do not extend that category to include unrelated, well-run businesses.

 

 

Nobody knew who was insolvent at that time (or becoming insolvent), so the treasury did the right thing and propped all of them. I think if they had not done so, the financial system would have gone into a meltdown and no financial institution would have survived. BY putting the support of the Us government behind them, the meltdown was avoided,

 

I guess some folks don't remember how bad it was. Perfectly good bonds were trading for less than 50c in the dollar and 20% yields in October 2015, because there were no bids. No bank would have made it out that mess, if this had persisted for an extended period of time

[DonFanucci]

Nobody knew who was insolvent at that time (or becoming insolvent), so the treasury did the right thing and propped all of them. I think if they had not done so, the financial system would have gone into a meltdown and no financial institution would have survived. BY putting the support of the Us government behind them, the meltdown was avoided,

 

I guess some folks don't remember how bad it was. Perfectly good bonds were trading for less than 50c in the dollar and 20% yields in October 2015, because there were no bids. No bank would have made it out that mess, if this had persisted for an extended period of time

 

I think plenty of people do remember that, considering how often it's asserted that the government needed to bail everyone out or society would have collapsed. What's not remembered is that the same people caused the problem in the first place. When the government took over Washington Mutual, it superseded all precedence and paid off depositors (even the uninsured) in full at the expense of bond holders who would have been senior debt in restructuring. Who is going to buy bank debt when there's no more rule of law and the government is flying by the seat of its pants?

 

The CEO of BB&T at the time:

"The decision to treat WaMu bondholders this way closed the capital markets for banks. BB& T had issued bonds a few weeks before the WaMu decision. It was a choppy market, but we had been able to raise capital funding. However, after the WaMu debtholders were crushed, the capital markets closed for all banks. I believe this was an even more significant event than Lehman Brothers’ failure. I think one of the main reasons that Bernanke and Paulson were so panicky when they went to Congress for $700 billion for the Troubled Asset Relief Program (TARP)— the so-called bank bailout— was that they realized that they had closed the capital markets for banks."

[StubbleJumper]

What's the difference between this Wells Fargo issue and these stories that went unnoticed?

 

http://www.bizjournals.com/sacramento/news/2012/03/21/calif-walmart-overcharge-customers.html

 

http://fox5sandiego.com/2015/02/11/target-to-pay-4m-fine-for-overcharging-customer/

 

Saying the CEO should be fired is like saying the CEOs of Walmart and Target should have been fired for giving store managers sales goals.  When you incentivize anything, there will be unintended consequences.

 

I would guess they were not bailed out by American taxpayers in the recent past.

.

 

Wells was not bailed out. They were forced to take on TARP as a show of solidarity in the financial system. But of course, the politics of the day and the mainstream will obfuscate that fact.

 

I think you might have missed the point that you eventually make in your own statement. Regardless whether they were forced  or not - they were important for the "financial system". Feds didn't shove billions down Walmart's or Target's throat and that's why what these Big Banks do gets amplified.

 

 

 

Precisely.  Everything was/is interconnected.  To that end they were required to participate, and should have been require to participate.  The nonsense that Wells management spouted at the time was self serving BS.  They would have gone under without the financial system bailouts.  So of course they willingly participated, probably quite happily, behind closed doors. 

 

 

Al,

 

Just to be completely fair, if the weaker banks failed and the financial system collapsed, how many other companies unrelated to the financial services industry would have gone under?  It's all fine and dandy to say that WFC "owes" Uncle Sam some special consideration because the government prevented a financial system collapse in 2008/09.  But, can we not say the very same thing for Sears Roebuck, Walmart, and pretty much all of the consumer discretionary sector?  If the financial system had collapsed and US gross domestic product fell by 30% as a result, I'm pretty sure that the carnage would have been widespread.  Does Sears Roebuck owe Uncle Sam some sort of special consideration for its indirect bail-out in 2008/09?  What about Carnival Cruise Lines, do they owe Uncle Sam some sort of consideration for the benefits that they realised from the financial system bail-out?

 

The deadbeats were the ones who *needed* a direct cash injection as a result of the bad management of their particular enterprise.  Do not extend that category to include unrelated, well-run businesses.

 

 

Nobody knew who was insolvent at that time (or becoming insolvent), so the treasury did the right thing and propped all of them. I think if they had not done so, the financial system would have gone into a meltdown and no financial institution would have survived. BY putting the support of the Us government behind them, the meltdown was avoided,

 

I guess some folks don't remember how bad it was. Perfectly good bonds were trading for less than 50c in the dollar and 20% yields in October 2015, because there were no bids. No bank would have made it out that mess, if this had persisted for an extended period of time

 

 

No, we all remember that mess quite well, and I personally made a pile of money at that time by investing in the financial sector. 

 

Go back and read my post again.  Nowhere did I say that the US government was wrong to bail out the financial sector, because quite clearly a complete collapse of the financial system may have triggered a drastic decline in GDP.  In fact, that was entirely my point.  The decision to bail out the weakest banks probably prevented complete carnage in many other sectors of the economy that are completely unrelated to the troubled banks (principally the consumer discretionary sector). 

 

So, here we are eight years later.  After the government forced WFC to take TARP (despite WFC, as an individual company, not needing TARP), can we really say that WFC was a greater beneficiary of the bailout than Home Depot, Disney or Carnival Cruise Lines?  Clearly all of those businesses would have been devastated by a hypothetical 25% or 30% decline in GDP that might have ensued in the absence of the bailout.  But as an individual company, WFC didn't need the TARP program to ensure its solvency any more than HD or CCL needed it (which is to say that all of them would have been in trouble without it).  All of those companies (and many more) benefited from the financial bailout despite not having managed their business in a reckless fashion.  So why would we ever say that WFC has any greater moral debt to Uncle Sam than HD, DIS, or CCL?  None of them needed the bailout because of their own recklessness, but they all benefited from it....

[DonFanucci]

So why would we ever say that WFC has any greater moral debt to Uncle Sam than HD, DIS, or CCL?  None of them needed the bailout because of their own recklessness, but they all benefited from it....

 

This is true but it's even worse than that. The government inflates a massive bubble through the mismanagement of interest rates and government sponsored entities, then it destroys the credit markets for financial institutions, then it forces WFC to take money, and now WFC forever owes a debt to the government?

[TwoCitiesCapital]

So why would we ever say that WFC has any greater moral debt to Uncle Sam than HD, DIS, or CCL?  None of them needed the bailout because of their own recklessness, but they all benefited from it....

 

This is true but it's even worse than that. The government inflates a massive bubble through the mismanagement of interest rates and government sponsored entities, then it destroys the credit markets for financial institutions, then it forces WFC to take money, and now WFC forever owes a debt to the government?

 

Sounds about right. They did the same with Fannie and Freddie, only the takings was much, much, much more explicit.

 

Realistically, we have systems for this sort of thing - the Fed was originally established as a lender of last resort to prevent this very daisy chain of failures we're talking about. Unfortunately, they've become much more involved manipulating interest rates, money supply, and capital markets and less involved with their original function.

 

The bad banks should have failed and the Fed should have provided the liquidity to the companies with the most exposure to the bad banks to prevent the daisy chain impact while well established bankruptcy rules/precedent worked out the assets to settle trade liabilities. Instead, the gov't went willy-nilly forcing bailouts on companies, ruining the established order of capital protections, creating much more uncertainty while make companies far more dependent on it, and forcing mega-mergers to make companies that were "too big to fail" even larger.

 

Real winning strategy it seems. Things would have been bad for a time, but the excess would have cleared, markets would be MORE stable because established precedent would have been maintained, the strong would have survived, and balance sheets would have been repaired/reset.

 

That would have likely led to a lower trough, but a much faster recovery instead of years of this muddling through and increasing reliance on Federal Reserve policy for a next policy-induced high.

[Candyman1]

"Wells was not bailed out. They were forced to take on TARP as a show of solidarity in the financial system. But of course, the politics of the day and the mainstream will obfuscate that fact."

 

I do agree that WFC was in better shape than other banks, but if the other banks would have been allowed to fail WFC would have been toast too. We'd all be eating at McDonalds. 

[Uccmal]

What's the difference between this Wells Fargo issue and these stories that went unnoticed?

 

http://www.bizjournals.com/sacramento/news/2012/03/21/calif-walmart-overcharge-customers.html

 

http://fox5sandiego.com/2015/02/11/target-to-pay-4m-fine-for-overcharging-customer/

 

Saying the CEO should be fired is like saying the CEOs of Walmart and Target should have been fired for giving store managers sales goals.  When you incentivize anything, there will be unintended consequences.

 

I would guess they were not bailed out by American taxpayers in the recent past.

 

Wells was not bailed out. They were forced to take on TARP as a show of solidarity in the financial system. But of course, the politics of the day and the mainstream will obfuscate that fact.

 

I think you might have missed the point that you eventually make in your own statement. Regardless whether they were forced  or not - they were important for the "financial system". Feds didn't shove billions down Walmart's or Target's throat and that's why what these Big Banks do gets amplified.

 

Precisely.  Everything was/is interconnected.  To that end they were required to participate, and should have been require to participate.  The nonsense that Wells management spouted at the time was self serving BS.  They would have gone under without the financial system bailouts.  So of course they willingly participated, probably quite happily, behind closed doors. 

 

 

Al,

 

Just to be completely fair, if the weaker banks failed and the financial system collapsed, how many other companies unrelated to the financial services industry would have gone under?  It's all fine and dandy to say that WFC "owes" Uncle Sam some special consideration because the government prevented a financial system collapse in 2008/09.  But, can we not say the very same thing for Sears Roebuck, Walmart, and pretty much all of the consumer discretionary sector?  If the financial system had collapsed and US gross domestic product fell by 30% as a result, I'm pretty sure that the carnage would have been widespread.  Does Sears Roebuck owe Uncle Sam some sort of special consideration for its indirect bail-out in 2008/09?  What about Carnival Cruise Lines, do they owe Uncle Sam some sort of consideration for the benefits that they realised from the financial system bail-out?

 

The deadbeats were the ones who *needed* a direct cash injection as a result of the bad management of their particular enterprise.  Do not extend that category to include unrelated, well-run businesses.

 

That is a fair assessment. 

 

There are other things to consider.  The banks operate at arms length from the government unlike a Sears, Home Depot or Walmart.  The larger banks trade with the government every single day.  The  government loans them money at low rates, and they theoretically lend it out at slightly higher rates.  The government involves them in treasury sales.  They are very reliant on the government, in every country in the world, and always have been.  I am not talking about the community savings and loan here.  I am talking about the big money center banks.  Wells had an obilgation to do what they were asked to help maintain the system.  If they had refused government would have cut them off from a major profit center, amd theynwould hage gone under.  It is not unlike the situation in the very early 1900s when JP Morgan (the individual) pulled all the big financiers into a room and wouldn't let them go until they signed onto his plan and privided capital. 

 

All this is around about way of saying that money center banks operate at the grace of government and always have.  They are back to being the regulated ultilities they once were, before the Reagan/Clinton eras.  When they misbehave they will get slapped.  Home Depot can misbehave and not get slapped by the government because they are not directly regulated beyond consumer protection acts.  No one is going to call the HD Ceo before senate because they encouraged staff to cross sell carpet and floor tiles.  But weakness in Home Depot is so much further down the economic chain than a big bank that the government doesn't care if they go under. 

[Uccmal]

So why would we ever say that WFC has any greater moral debt to Uncle Sam than HD, DIS, or CCL?  None of them needed the bailout because of their own recklessness, but they all benefited from it....

 

This is true but it's even worse than that. The government inflates a massive bubble through the mismanagement of interest rates and government sponsored entities, then it destroys the credit markets for financial institutions, then it forces WFC to take money, and now WFC forever owes a debt to the government?

 

Sounds about right. They did the same with Fannie and Freddie, only the takings was much, much, much more explicit.

 

Realistically, we have systems for this sort of thing - the Fed was originally established as a lender of last resort to prevent this very daisy chain of failures we're talking about. Unfortunately, they've become much more involved manipulating interest rates, money supply, and capital markets and less involved with their original function.

 

The bad banks should have failed and the Fed should have provided the liquidity to the companies with the most exposure to the bad banks to prevent the daisy chain impact while well established bankruptcy rules/precedent worked out the assets to settle trade liabilities. Instead, the gov't went willy-nilly forcing bailouts on companies, ruining the established order of capital protections, creating much more uncertainty while make companies far more dependent on it, and forcing mega-mergers to make companies that were "too big to fail" even larger.

 

Real winning strategy it seems. Things would have been bad for a time, but the excess would have cleared, markets would be MORE stable because established precedent would have been maintained, the strong would have survived, and balance sheets would have been repaired/reset.

 

That would have likely led to a lower trough, but a much faster recovery instead of years of this muddling through and increasing reliance on Federal Reserve policy for a next policy-induced high.

 

Your are not wrong.  The problem was (and still is):  How do you tell who is stronger/weaker in an incredibly fast moving situation as 2008.  No doubt you have tried to read and understand the balance sheet of any major bank as I have.  We, including Buffett and each banks CEOs, have no real idea of their exposure to other institutions through their derivatives books.  Operating from this standpoint the government did the right thing with the information at hand.  If Wells lied, or actually wasn't sure of what was on their books, and went under, things would have been far worse.  As it was they did as they were told and its water under the bridge now.  Its all acconted in the diluted EPS.  It doesn't excuse them from future infractions. 

 

To your point on the muddle through.  IMO other forces are at work, specifically the slowdown in population growth, and the effect of technology on job creation.  Governments will keep muddling as they always have. 

[DonFanucci]

Your are not wrong.  The problem was (and still is):  How do you tell who is stronger/weaker in an incredibly fast moving situation as 2008.  No doubt you have tried to read and understand the balance sheet of any major bank as I have.  We, including Buffett and each banks CEOs, have no real idea of their exposure to other institutions through their derivatives books.  Operating from this standpoint the government did the right thing with the information at hand.  If Wells lied, or actually wasn't sure of what was on their books, and went under, things would have been far worse.  As it was they did as they were told and its water under the bridge now.  Its all acconted in the diluted EPS.  It doesn't excuse them from future infractions. 

 

To your point on the muddle through.  IMO other forces are at work, specifically the slowdown in population growth, and the effect of technology on job creation.  Governments will keep muddling as they always have.

 

I don't see how this is the case. They are the ones that froze the credit markets. Why should they be praised for administering medicine to cure an illness they caused?

[rb]

This ain't good

 

http://www.bloomberg.com/news/articles/2016-09-28/california-suspends-business-relationships-with-wells-fargo-itn9dfxw

[Grenville]

This ain't good

 

http://www.bloomberg.com/news/articles/2016-09-28/california-suspends-business-relationships-with-wells-fargo-itn9dfxw

 

nope not good…they are suspending their relationship for a year…I hope Stumpf is getting the message a little more clearly

 

“I have a duty as a leader in the financial marketplace to take action aimed at helping you understand that integrity and trust matter,” Chiang wrote in his letter to Wells Fargo. “How can I continue to entrust the public’s money to an organization which has shown such little regard for the legions of Californians who have placed their financial well-being in its care?”

 

Here's a link to his statement:

http://www.treasurer.ca.gov/news/releases/2016/20160928.pdf

 

Looks like he's trying to run for Governor of CA in 2018…using WFC as a political platform

[meiroy]

 

What's really "not good" about this is that it might lead to even more excessive regulation on banks and cause a slow-down in the economy followed by a recession. 

[StubbleJumper]

This ain't good

 

http://www.bloomberg.com/news/articles/2016-09-28/california-suspends-business-relationships-with-wells-fargo-itn9dfxw

 

 

Sure, it's not good.  But, turning to some school-boy arithmetic, what sort of underwriting profit might this cost WFC?  Suppose WFC would normally make 2.5% underwriting profit on let's say $100 billion of debt that California might need underwritten during a year.  That's like $2.5B, pre-tax, or about $0.40/share post-tax.  Both the 2.5% and the $100B are probably very generous, meaning the $0.40/sh is probably far too high.

 

 

SJ

[Mephistopheles]

The problem is who else is going to follow and take California's lead? The NY MTA has also done the same thing though their actions were independent. This can potentially get very ugly as municipalities across the country try to score political points. This idiot in CA is running for governor in 2018, go figure.

 

Btw, CA is Wells' biggest client in munis.

[Uccmal]

The stock is not cheap enough yet.  Jpm got hammered way worse after the "whale" incident.  It needs to be in the mid 30s for me to get remotely interested.  If this doesn't take it there it will get there in the next recession. 

[DTEJD1997]

Hey all:

 

Can somebody explain to me how WFC does NOT spend tens of millions or HUNDREDS of millions fending off numerous class action law suits?  OR in the case of people who had their credit report damaged, failed to get a job/mortgage, individual law suits?

 

OR as another poster postulated, lots of municipalities pulling their business from WFC?

 

THEN on top of all of that, you've got the execs from WFC testifying in front of Congress.  That looks terrible.

 

THEN you've got these banksters making tens of millions in bonus & pay...Sure, they are smart & hard workers, but they get paid tens of millions?  I would think one of the biggest cost savings would be outsourcing these "C" level jobs!  Just think of all the money they could save!  These dudes were paid tens of millions and they didn't know systemic fraud was going on?  Yep, outsource that job!  I bet you could get a non-American to work that job for only $2MM a year + pension + health care.  Heck, I might even apply!

 

Bottom line is I think WFC has a real chance of being permanently damaged here.  We'll see.

[Picasso]

The difference with the London Whale is that 2008 was still fresh in everyone's mind so the reaction was much more fearful.  I don't know what direct losses will come from this Wells problem but it probably won't be very much.  Let's say it's a $2 billion hit to the underlying earnings (seems over the top but I'll go with it), @ 10x that should be about a $20 billion market cap loss.  Which is basically what it lost in value.  That's also after a few years of multiple contraction, so you could argue that Wells might have been too expensive in 2014 or too cheap going into this decline.  Maybe a combination of both.  But it seems like it could be a fairly decent investment at this price.  Not amazing, but decent.

[bearprowler6]

The stock is not cheap enough yet.  Jpm got hammered way worse after the "whale" incident.  It needs to be in the mid 30s for me to get remotely interested.  If this doesn't take it there it will get there in the next recession.

 

+1

 

As I await a lower entry point on the stock I continue to wonder whether or not  WFC meets Munger's "sewer" test definition?

[cmlber]

The stock is not cheap enough yet.  Jpm got hammered way worse after the "whale" incident.  It needs to be in the mid 30s for me to get remotely interested.  If this doesn't take it there it will get there in the next recession.

 

+1

 

As I await a lower entry point on the stock I continue to wonder whether or not  WFC meets Munger's "sewer" test definition?

 

Can anybody come up with a company with a market cap above $25 billion that has been in business longer than a decade and has never had an employee (or group of employees) cause $2 million or more in damages to consumers?