Question

Name/Lists the risks specific to Wells Fargo, what are the economic indicators? geo policial? country? competiors? financial innovators? regulators? operational? capital structure? stress tests results? or other financial risks?

[Requires Research]

Answer 1

Changing economic conditions have tremendous consequences for business lines at Wells Fargo.
Wells Fargo, JPMorgan Chase, Bank of America and the banking industry as a whole have to deal with the challenges faced by various economic conditions shifts. The most obvious point is that if the U.S. economy weakens in key areas such as jobs and housing, it might theoretically affect major banking companies. Wells Fargo reports that rising house prices and better job conditions have helped to increased its credit risk reserves and have generally enhanced the efficiency of its loan portfolio.

However, economic growth has its own risks, at the same time. As the economy accelerates, the Federal Reserve becomes more likely to increase interest rates, and the resulting flattening of the yield curve will harm the net interest margins of Wells Fargo and thus strain the income of its core banking operations. Rising rates in response to economic growth will also continue to harm the amount of refinancing, which relies on falling rates to allow borrowers to leave their old mortgages.

.Regulatory confusion is not early to go anywhere.Significant shifts in the regulatory environment have forced Wells Fargo, Bank of America and JPMorgan Chase to adjust, as their position among the largest bank holding companies has put them in the crosshairs of regulators trying to enforce stricter requirements on the banking industry in general. Wells Fargo describes many regulatory measures as potentially troublesome, including continuing implementation of amendments to the Dodd-Frank Act, capital and liquidity requirements in Basel, and supplementary capital rules and guidelines in the Federal Reserve.

Potential developments are posing new challenges on the mortgage market.
Wells Fargo reports that its mortgage business is a vital part of its overall growth, and it relies to a large degree on government-sponsored firms Fannie Mae and Freddie Mac to repurchase much of the loans it provides to customers. Wells Fargo, as the largest mortgage originator and servicer in the U.S., is especially vulnerable to shifts in the mortgage market, and attempts by the government to wind down Fannie Mae and Freddie Mac could potentially turn the industry in a way that would require a rapid and fast bank response.