Is Wells Fargo still a safe bank?

Is Wells Fargo still a safe bank?


Wells is under fire for buying too many long-dated securities at the peak of the market. Any reasonable Chief Risk Officer would hedge that debt with proper risk management. Similar to Silicon Valley Bank. See our piece: What caused the run on Silicon Valley Bank? Wells hedged, but according to some critics, not enough.

Could Wells Fargo be shut down?

Possibly, but highly unlikely. However, don’t fret!

Keep your account below $250,000 and you have nothing to worry about!

Lately all we can read about these days are banks failing everywhere! Now some worry Will Bank of America Collapse? And many others worry whether or not Will Wells Fargo Fail? And of course, many others worry about the more local establishments. Will First Republic Bank Fail ?

Hawaii Bank Run?

Wells Fargo is one of the largest banks in the United States, and it has a long history of operations. It is regulated by the Federal Reserve and has undergone several stress tests to determine its ability to weather financial shocks. However, like any bank, Wells Fargo is subject to market forces and economic conditions that can affect its financial stability.

Wells Fargo Logo (2020).svg
The new logo for Wells Fargo

When it comes to the safety of your money, most banks in the United States are insured by the Federal Deposit Insurance Corporation (FDIC). This means that your deposits are protected up to a certain amount (currently $250,000 per depositor per insured bank) in the event that the bank fails. It’s important to note that FDIC insurance is not a guarantee against losses due to investment or market fluctuations.

How Do I Know my Money is Safe? | Wells Fargo

Below we have a chart showing unrealized depreciation on Hold to Maturity Securities (HTM) for top 100 banks versus equity. 

These unrealized losses are NOT reflected in profits or a deduct to equity via Other Comprehensive Income (OCI) – only in the footnotes! Moreover, we don’t find these losses reflected in stress tests or measures of capital adequacy. 

Furthermore a 25 bp (1/4 of 1 percent) increase in rates for a 10-year security causes approximately 2 points in losses (100 par to 98 to reflect yield discount). 

Wells Fargo is a large financial institution that has been in operation for over 150 years. It has gone through various phases of growth and expansion, as well as periods of scrutiny and criticism.

During the financial crisis of 2008, Wells Fargo was one of the few major banks that did not require a bailout from the government. Instead, it acquired Wachovia, a troubled bank that had significant exposure to the subprime mortgage market.

This acquisition helped Wells Fargo expand its market share and become one of the largest banks in the United States.

However, in 2016, Wells Fargo faced a major scandal involving the creation of millions of unauthorized accounts by its employees. The scandal resulted in a $185 million settlement with regulators and the resignation of several top executives, including the CEO. The incident damaged the bank’s reputation and resulted in increased scrutiny from regulators and lawmakers.

Is Wells Fargo bank going under?

Since the scandal, Wells Fargo has taken steps to address its internal controls and compliance processes. The bank has also faced additional penalties and regulatory actions, including a $3 billion settlement with the Department of Justice in 2020 over its sales practices.

Overall, Wells Fargo’s recent history has been marked by both successes and challenges. While the bank weathered the financial crisis relatively well, the scandal involving its sales practices has led to significant financial and reputational damage.

Is Wells Fargo still a safe bank?