Wells Fargo Is a Turnaround Story

Wells Fargo has a huge lead on the expense reduction front because it was reducing headcount while others were adding employees. Charlie Sharf knows where to find the cost and take them out in the banking business when we want to measure the success of cross cutting. The Federal Reserve interest rates gives banks a fabulous net interest margin boost but the downside of rate hikes is that they cause unemployment which leads to customers defaulting on their loans. While loan losses are increasing from historic levels there's still at very low levels with only 17 basis points of net charge loss in a third quarter. They also got a lot of room for buyback although they haven't done any buybacks in the last two quarters as