Wells Fargo Emerges as an Industry Leader

Results from the 3rd quarter show that Wells Fargo has emerged as one of the most profitable members of the consumer banking industry.  Wells Fargo & Co., the 4th largest bank by assets, had a profitable quarter as it lent $150 million more than it did in the 2nd quarter.  This increase in lending led to more than $2 billion of profit for the bank.  One of the key factors that stimulated Wells Fargo's 3rd quarter growth was low mortgage rates originating from government stimulus programs.  The government's attempts to stimulate the economy led to an increase in demand for new mortgages, which boosted Wells Fargo's profits.

This news is important for the consumer banking industry on two levels.  First, Wells Fargo's higher profits indicate a larger trend of increasing demand for new mortgages.  This is important because it shows that consumers have confidence in applying for new mortgages.  Consumer confidence is important as the economy continues to recover from the global recession.  Hopefully higher consumer confidence will continue to stimulate growth in the consumer banking industry and benefit the economy as a whole.

Wells Fargo's increasing profits also display the government's role in changing the landscape of the consumer banking industry.  Government programs to "entice home buyers" are important factors that contribute to the increase in consumer demand.  This shows that the government has an important role in affecting the consumer banking industry and its profits.  By stimulating profit, the government offset some of its regulations limiting overdraft fees.  Either way, Wells Fargo's earnings show that the government plays an important role in shaping the landscape of the consumer banking industry.

-Justin Schaffer
Source: WSJ http://online.wsj.com/article/SB10001424052702304741404575563881198351028.html