Wells Fargo: Wild At Heart

In reviewing the 2005 annual report of Wells Fargo (WFC), some surprising facts emerge. While WFC is the only bank in the U.S. rated Triple A by Moody's, risk-taking behaviors do lurk under the surface. The first surprise was that WFC made more money as a venture capitalist last year ($500 million) than it did through its 1200+ stores in consumer finance ($400 million). The second surprise was that junior lien mortgages stood at nearly $60 billion or 20% of the loan book. This seems a departure from Triple A behavior. It will be interesting to see how these perform over this tightening cycle.