Three hours into the trading day, Wells Fargo & Co (NYSE:WFC) is keeping its head above water, but that’s about it: The superbank is up 0.35% after opening down 0.06%. Wells Fargo & Co (NYSE:WFC) is underperforming its Big Four banking peers and the broader markets today, despite some good news from the New York State’s Attorney General’s office delivered on Saturday. What gives?
A second chance
The Seattle Times is reporting that neither Wells Fargo & Co (NYSE:WFC) nor Bank of America Corp (NYSE:BAC) will have to face an enforcement action from Eric Schneiderman’s bank-busting AG’s office. This past May, Schneiderman had leveled charges against the two superbanks, claiming that both had violated a 2012 mortgage-servicing settlement designed to “fix violations and remediate harm to [home] borrowers.”
According to the settlement’s monitoring committee, the new oversight process for Wells Fargo & Co (NYSE:WFC) and Bank of America Corp (NYSE:BAC) “will be the most efficient path to improving services [and] will bring about those reforms more quickly than protracted litigation on these particular issues.”
Foolish bottom line
There was no mention in the article about what would have happened had Schneiderman and company not agreed to give Wells and Bank of America Corp (NYSE:BAC) another chance at sticking to the terms of the original $25 billion settlement, but the barely disguised threat of more litigation was clear. And litigation costs money.
Then there’s the fines and/or additional payouts that would have almost undoubtedly followed the litigation. In short, both Wells and B of A were smart to sign onto the new oversight plan from a monetary and public-relations perspective. So with this bit of good news in Wells’ pocket, why isn’t the superbank performing better today?
With uncertainty over what the Fed will ultimately do regarding quantitative easing, and lingering unease over a possible credit crunch in China, there’s just a lot of volatility in the market right now. And being the nation’s biggest home lender, with mortgage rates on the rise, Wells might be taking it on the chin right now more than other banks.
The flip side of all this is, Wells Fargo & Co (NYSE:WFC) has such a well-deserved reputation as the steady-Eddie of big banking that its stock price typically doesn’t swing as far up or down as its peers’ — regardless of what’s going on in the markets. That’s just another reason to focus more on the fundamentals of the companies you’re invested in and tune out the market noise. Wells Fargo & Co (NYSE:WFC) is a great bank, and arguably the banking sector’s best long-term buy. So Wells not tearing up the market today is no reason to stay away.
The article Wells Fargo Is Underperforming Today Despite Good News originally appeared on Fool.com and is written by John Grgurich.
Fool contributor John Grgurich owns no shares in any companies mentioned. Follow John’s dispatches from the not-so-muddy trenches of big-banking and high-finance on Twitter @TMFGrgurich. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America and Wells Fargo.
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