Saturday, October 1, 2011

REASONS WHY YOU SHOULD MOVE YOUR ACCOUNTS TO A LOCAL BANK TODAY


Wells Fargo may be too big to keep customers happy

Updated: September 30, 2011 3:41PM


Dear Mr. Berko: I own 75 shares of Wells Fargo that I bought earlier this year at $33.60. It’s now $24. Should I buy another 75 shares at the current price, or should I sell the stock? Or do you think that its takeover of Wachovia, where I bank, will give Wells Fargo good reason to run back to my purchase price?
I really liked Wachovia because it was such a nice and easy place to do business. I hope the change to Wells Fargo will be a good one.
WE, Gainesville, Fla.
Dear WE: Ouch. I’m so sorry. Wachovia used to be such a nice bank. Now, you’ve got Wells Fargo (WFC-$25.63), a bank too bloody big, with its 6,987 offices, $1.3 trillion in assets, 407,000 employees and 50,000 vice presidents. WFC is so big that an e-mail sent from its San Francisco home office takes about 31 minutes to reach your Gainesville branch, even though it’s going downhill.
There’s a rule that I follow: When my bank gets taken over by a larger bank, it’s time to change banks. And you may soon discover WFC slamming you with niggling changes, fees and charges that are sure to make your blood boil: a $3 monthly fee (plus usual charges) on your debit card; the elimination of your debit rewards program; a new monthly fee for credit cards; a surcharge on your checking account that could cost you an average of $25 a month; and replacement checkbooks that may cost you $25. Management is also considering a $6 monthly charge to send your statements via mail, a $7 charge to print a copy of a check you wrote, and $3.50 if you need to use the branch’s toilet facilities.
Wells Fargo has a mandate to make money. Wall Street wants WFC to have higher revenues and stock prices every year while investors demand annual increases in earnings and dividends. And if WFC fails to produce, CEO John G. Stumpf (who made $17 million last year) and all the little Stumpfniks under him could be replaced. And if Stumpf and his Stumpfniks don’t increase loan volume, fail to increase trading profits, can’t increase their derivative business, and are unable to make more money speculating in currency futures or commodity transactions or gouging credit and debit card customers, they may get sacked.
So now might be the time to move your account to one of the customer-friendly credit unions in Gainesville. You’ll get better money market rates, friendlier checking account service and an all-around more positive banking experience — with the same level of federal insurance on your deposits.
So move your account and sell your WFC shares. I know Wall Street has a high $47 target price on WFC, but I think the Street is smoking dope. The Street expects 2011 earnings to come in at $3.05, but I think those idiots are in denial. I know that Goldman Sachs, Citigroup, UBS, Merrill Lynch, Oppenheimer and others have strong “buy” ratings on WFC, but I think those lads have brain damage; they all had that “buy” rating in place when WFC was $34. And I know that the 10 top mutual funds own half a billion shares of WFC, but I think those fund managers suffer from dementia.
I believe WFC’s enormous trading profits in currency futures; commodities (oil, gas, gold, copper, natural gas); derivatives; equities; municipal and corporate bonds; mortgages; treasuries; and underwritings will be greatly disappointing. And I think WFC is now trying to figure out which of its 400,000 employees it can pink-slip to mitigate the impact on declining earnings.
I think it’s going to be a very long wait ‘til WFC returns to your $33.60 purchase price.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or e-mail him at mjberko@yahoo.com.

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