Wells Fargo (NYSE:WFC) seems to be running with the pack this morning, up only 0.2% an hour into trading. While the big bank seemed to get a boost last week from the not-surprising news that Warren Buffett's outfit bought up more shares of its biggest holding during the first quarter, the aftereffects may be wearing off.
A look around the sector
Most of the banks are holding their ground this morning, which essentially means following the overall market trends:
- The KBW Bank Index (DJINDICES:^BKX) is up 0.29%.
- Citigroup is also at a 0.29% gain.
- Bank of America is trending a tiny bit higher at 0.37%.
- JPMorgan Chase is the lone wolf with a 0.44% loss this morning.
This week is a big one for housing data, so the banks may have a better chance of gaining as we move toward Friday. So far, there's been little news to help generate momentum, leaving bank investors to their own devices.
Wells had a spat of headlines that weren't too favorable as we exited last week, but they don't seem to be on a large enough scale to cause investors any concern.
A judge has ordered the bank to pay $203 million to customers in a case that was filed in 2010 concerning the bank's manipulation of debit card transactions to incite more overdraft fees. The bank would post transactions in order of highest charge to lowest instead of the order in which the transactions were made, causing many customers to overdraw their accounts. A federal appeals court had thrown out the penalty while hearing the case, but found that the bank was liable for fraud violations and sent it back to U.S. District court, where the judge reinstated the $203 million award for customers. The bank plans to appeal.
In Orlando, the bank is under fire by a homeowner who says that the bank improperly foreclosed on his house even though he had been making his payments on time. The loan in question was modified, and the homeowner was required to make four monthly payments on time in order for his reduced rate to become permanent. According to the man, the bank stopped accepting his payments and began foreclosure procedures. The issue at hand is that the customer made both early payments and larger payments than the loan documents dictated, leading the bank to take action. Wells Fargo, in a statement to a local news reported, stated that since the loan was in a mortgage-backed security, the payment guidelines were absolute, and therefore the homeowner didn't follow the terms of the loan, but that the bank will work with him to resolve the issue.
Another day on the market
The legal battles that Wells has to face now are really small scale, leaving investors with little to worry about. But today's moves also show that any given day can be the one where the bank moves to the beat of Mr. Market's drummer. Without cause by the bank, it could drop -- leaving you with unnecessary stress from following the stock's every move. Keep an eye on the long term, and you'll weather the ups and downs just fine.