Small-Investor

Wells Fargo Lays Bear Trap on Wall Street

Seems very lopsided, trying to build a justification after deciding on the conclusion. $265 MM = $0.08 analogy (though it is flawed as also shown by "Bankonit" post) needs to be adjusted for tax... conveniently forgotten. The question also is whether the $1.5 Bn would have remained unchanged if the $265 MM policy change had not occured....if not, then we could have had $265 MM + addnl reserve of $1,235 MM...basically no effect on EPS...see the last line from the earnings call transcript :

Credit Quality
Overall credit quality deteriorated in the second quarter. Net charge-offs in the second quarter were $1.5 billion, or 1.55 percent of average loans annualized. As previously disclosed, beginning in the second quarter we changed our home equity charge-off policy
from 120 days to no more than 180 days, consistent with FFIEC guidelines. The impact of this change deferred approximately $265 million in home equity charge-offs from second quarter, although the change in policy did not reduce second quarter provision expense
which included the deferred charge-offs.