Wells Fargo has become the largest U.S. bank

Less than four months after my earlier post about Wells Fargo becoming the largest capitalized U.S. bank, it has now overtaken JP Morgan and Bank of America in market cap. At $33.5/share, Wells is valued at about $175B, while BofA is at $172B, and JP Morgan which used to be the largest is now at about $164B.

This change of positions are largely due to the potential impacts from the pending financial regulations which aim squarely at Wall Street and trading operations. Among the large banks, Wells Fargo has the least exposure.

In addition, the recent European sovereign turmoil, and the worry about writedowns that many of these European banks and international banks may suffer from, have added to the change. Wells Fargo is more of a pure U.S. commercial banking play, whereas B of A and JP Morgan, Citigroup all have sizeable international franchises.

It is also interesting to observe that HSBC which has more concentration in Europe and Asia, has seen its market cap drop to about $172B, behind Wells as well.

It pays to be more focused on earnings quality and being truely conservative.

The widening criminal investigation on Wall Street firms from Morgan Stanley, to Citigroup, to JP Morgan in particular may do a lot of damage to trading firm's reputation. Interestingly, Goldman Sachs, being the first to be investigated now may start to gain back its composure because everyone on Wall Street is in the same boat. When Goldman's clients look at this picture, what are they going to conclude? You still go with the "best."