Wells Fargo Is a Survivor

Did John Stumpf stump me when I interviewed him on "Mad Money at the Half" today? Did the Wells Fargo CEO dodge the Level Three inquiries I had -- you know, that stuff that's hard to price and hard to get rid of, not to mention hard to fathom?

I think Stumpf explained himself appropriately by

1. saying he took a big charge and writedown before moving anything to Level Three, so there shouldn't be any surprises
2. not risking much by raising the dividend, given how much money the company is making
3. explaining away the change in how home-equity loan charge-offs are taken in a way that showed he isn't hiding bad loans, but simply conforming to the rest of the industry, and
4. taking advantage of huge spreads in the mortgage market by leveraging up and lending even though defaults haven't peaked.

I don't think you could be more honest than that. I wish he had told me actually how much collateralized debt obligations he really has now -- I couldn't get an update. But I also believe that WFC is a company that is taking advantage of the chaos even though the loan losses are bothersome, because WFC sees an opportunity to clean up while others struggle. As he pointed out, last year he was shrinking the balance sheet because there weren't a lot of opportunities, now the opportunities abound and he isn't shrinking from them.

WFC's a survivor. Can it go lower? Of course. Will its stock tank when Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take) get confiscated? Maybe. Will it be higher nine months from now, when I believe housing will bottom?

Absolutely.

Random musings: When the die is cast, you are history. That's how I feel about the decline once we didn't mount a rally above minus 90 on the Dow.

At the time of publication, Cramer had no positions in the stocks mentioned.

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