Wells sheds light on mortgage fiasco

Unless judges and pols want to sink the economy, the foreclosure mess won't shut down the banks. Wells Fargo, for one, is doing much better.

By Jim Cramer Oct 21, 2010 8:43AM

jim cramerBy Jim Cramer, TheStreet


Don't waste another moment thinking about this foreclosure mess until you listen to the Wells Fargo (WFC) conference call -- a turgid affair but one that will make you realize that there is no way this process is going to be shut down unless the judges and politicians really do want to bankrupt the banks and kill the U.S. economy. Given how costly it was to save the banking system, even anti-bank President Barack Obama is not in favor of putting it on its heels again.


Maybe because there are so many business outlets writing and commenting on issues, or maybe because of the unchecked nature of the Web, it has become almost common and accepted wisdom that many things were done wrong on the paperwork of loans themselves.


I think that's wrong. If you listen to Wells Fargo -- and I have never thought they were liars -- the process has pretty much been the same all along, and there are no title-chain complications WHATSOEVER. It remains a good, profitable, growing business for WFC.


Now, of course, Wells is a "good" actor in the system. Many others were "bad" actors, including many fly-by-night outfits that got involved when the nation was buying and selling 7 million homes a year. The spawn of the bad-actor originators that were packaged -- the non-whole-loan mortgages, meaning the ones not owned by the banks -- are problematic in many ways.

BUT NOT TO WELLS, and not to most major banks, the exception being the convoluted Bank of America (BAC). Convoluted because it was an amalgam of really bad loans made by Countrywide -- worse than Wachovia's "Pick-a-Pay" loans -- and perhaps decent loans by Bank of America itself.


But let's stick with Wells, because Wells turned the group around.

I think that Wells may allow us to develop a new worldview of the banks as companies that are beginning to make a lot of money lending, and lending more than they were, while they clean up the balance sheets.


What does that mean in English? I think that at last the number bumps you see this morning are real. You want to be in the stocks of companies where the estimates are rising, and this was the first quarter when they did it in any uniform fashion for many banks -- and Wells Fargo is probably the best of the large ones.


Despite the propaganda, we do not care at this stage of the cycle how the estimates go higher. We only need to think that when this bank was at $25 a year ago, it was losing money hand over fist and it needed capital. Now it is the exact opposite -- and it is still at $25.


Go through this quarter: no change-of-title worries, lots of new business, lots of cost synergies, far fewer bad loans and a workout of Wachovia's worst loans that has shown the loss estimates to be way too high.


Now, all of this is what the company says. Many people think the company is not honest. They don't come out and say it, but that's the tone of the comments. If you don't think Wells is honest, then what it says doesn't matter.


I think it does.


Random musings: I am not viewing Citigroup (C) through the same prism as the rest of the banks going forward. It is an international story that will show great growth in a couple of quarters, and this mortgage business will have far less impact on Citi than on B of A or Wells or any of the other majors.


At the time of publication, Cramer was long Bank of America.


Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.


Click here to follow Cramer's trades for his Charitable Trust.


Related Articles

Oct 21, 2010 4:38PM
Cramer you must be on the Banks payroll! The American economy tied to the Banks who lie cheat and steal the American middle class every day! Yes give them more of our Tax dollars to fix the foreclosure mess they created. Because of Greed and lack of humanity to those less fortunate than them! But it aint over till the Fat Lady sings their time is coming!!
Oct 21, 2010 4:05PM
It seemed to me to be a "Tempest in a Teapot" originally and I still think so.  The media have nothing more to do than to stir up furors and problems so that they can write about them and/or televise them.  Most people are total idiots who have NO IDEA of the complexities of the commerce that goes on in the world today, nor will they ever!  So, people, just go ahead and live your humdrum lives and get yourselves into financial troubles and blame the big, bad banks for the STUPID decisions that you make! 
Oct 21, 2010 1:26PM
I'm done wasting my time reading Cramer, he has his nose so far up the Banks arses that you can't see his feet.  Wells Far can be trusted, stick with that one Jimmie
Oct 21, 2010 10:05AM

no job,

no house,

no money


no problem

listening to  Cramer and how great things are...priceless

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.