Bad mortgages get worse at Wells Fargo stretching out schedule for paying back $25 billion bailout
Fear of the future trumps current earnings, as far as investors are concerned, when it comes to Wells Fargo (WFC).
On July 22, before the opening bell, the company reported second quarter earnings of 57 cents a share–far above the 34 cents a share Wall Street had projected, and revenue of $22.5 billion, again above Wall Street expections of $20.5 billion. As the company said in its conference call, “Wells Fargo earned another record profit this quarter: $3.17 bln. While many banks are struggling to earn consistent operating profits, we’ve had back-to-back quarterly record profits”
And once the stock market opened for trading, the stock sunk like a stone. By 11 a.m. ET shares had dropped by 6%.
Why? Because investors looked past current earnings and revenue to the bank’s huge portfolio of some of the riskiest types of mortgage loans in some of the nation’s worst real estate markets, and didn’t see much that they liked. Read more
