Wells Fargo Deposits Over Loans Rise To Record $176 Billion

Tyler Durden's picture

While Wall Street combs through Wells Fargo's numbers (which unlike the rest of US banks is not just a glorified hedge fund and actually still lends out deposits, primarily to fund home loans) to find some glimmer of good news (judging by the stock price it hasn't succeeded yet and won't), there is just one number that is of particular significance: that would be $176.5 billion, or the amount of excess total deposits ($976.1 billion) over loans ($799.6 billion) as of Q4. This is an all time record delta (as is to be expected since the entire US financial system now has a $2 trillion excess in deposits over loans), and a dramatic inversion from the excess loans over deposits that marked the bank's "Old Normal" balance sheet.

Why is this significant? Because as we have been showing in recent weeks, this excess funding is nothing but Fed reserve-facilitated (and repoed) prop trading capital - see JPM CIO.

Which begs the question: just what is Wells Fargo doing with this $176.5 billion in dry powder? Because if JPM used its $423 billion "deposit to loan gap" to fund a $323 billion internal prop trading book, does this mean that Wells is using some $120 billion or so to buy the stock of other banks, or ETFs that contain WFC stock in them?

We will only find out, if/when Wells too has a "Fail Whale" moment.

As for the other metrics reported by the bank, here are the main ones courtesy of Bloomberg:

  • Wells Fargo 4Q home mortgage applications $152b vs $188b Q/q, application pipeline $81b qtr end vs $97b Q/q.
  • Originations $125b vs $139b
  • Residential servicing portfolio $1.9t
  • Loans 90+ days past due (govt. guaranteed) $21.8b vs $21.4b Q/q; (ex. govt guaranteed) $1.4b end qtr vs $1.5b Q/q
  • Provisions for loan repo losses $379m vs $462m Q/q
  • Net MSRs $220m vs $142m Q/q on MSRs valuation adjs. made in 3Q for increased servicing, foreclosure costs

And, of course, Net Interest Margin, which is rapidly approaching zero, thank you ZIRP Bernanke.

Full Q4 earnings supplement from Wells:

WFC Q4 by zerohedge

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Jason T's picture

"The disintegration continued, and there seemed no power great enough to stop it. The treasury was empty, agriculture prostrate, industry demoralized, trade stagnant, and the only commercial activity was a maddened, consuming, parasitic speculation. In A.D. 301 Diocletian issued his famous price fix- ing decree as the last measure of a desperate sovereign."


Pg 43 of Money and Man

economics9698's picture

If it’s too good to be true, I knew those excess reserves sitting idle getting 0.003% was bull shit.  Thanks Tyler for exposing this bull shit game.


narnia's picture

We have a debt based monetary system.  Every FRN in circulation was loaned into existence or conjured out of thin air.  

If you ran a full finanical system consolidated balance sheet, these counterproductive legal arbitrage institutional assets would be offset by a loan originated somewhere in the system.  The fact that that loan has originated with no collateral other than the promise of future taxation or some illustory credit of the FDIC is what should be called into question.  

DaveyJones's picture

a very comic discussion with William Black and Matt Taibbi on the latest Treasury Secretary and his troubled background. I love William Black. He not only has the expertise, he has the appropriate tone, sarcasm and gagging disgust necessary for this hallowed subject. From the very first words out of his mouth 

My God, this place is a criminal cesspool and swirling faster

http://www.democracynow.org/  at 17 mins

Buckaroo Banzai's picture

"He has screwed up everything substantively that he has ever touched." -- William Black

DaveyJones's picture

at least he's consistent

actually, he has screwed us the worst but he would never "touch" a commoner

whatsinaname's picture

But if 10 year and 30 year rates stay bubbly as they have been in recent weeks does it not make it harder for the banks to make money on the reverse repos ? 

bania's picture

Mad banking skillz!

pods's picture

Am I fair to assume this is bullish?


AccreditedEYE's picture

Yes indeed... Everything is bullish.. especially when it comes to a TBTF bank. :) Buy 'em UP!

sablya's picture

The proverbial money on the sidelines is real, just like the white whale!

unplugged's picture

Where can I sign-up to get some Bernankobama gummit handout money to trade with? 

Cursive's picture

I wish I could get the same rate as their net interest margin.

LawsofPhysics's picture

become a primary dealer and you can.

eatthebanksters's picture

If you were Corzine you could...

DaveyJones's picture

like the primary colors, it's a closed and flashy club

Rainman's picture

Prime rate is just as rigged as LIBOR by the 10 big banks


LawsofPhysics's picture

Do people want banks to be "just banks" again?  What a novel concept.  I am of the philosophy that if you give someone (in this case banks) enough rope, any "problems" you had with them is eventually taken care of (in that they will either do something productive or simply hang themselves).

Your move banker fucks, go ahead, "rehypothicate" all those deposits, I dare you.  Time to find out how many "Corzines" the world will tolerate before the guillotines roll.

Fuck the paper-pushers.

DaveyJones's picture

I love playing the hangman but that rope is so gaddamn expensive  

Dexter Morgan's picture

Especially when it's made out of hemp.

HD's picture

Get out of the tub and start loaning it out Warren.

Let's get hyperinflation started up in here... $80 bread to go with my free toaster.

mcl2177's picture

In other news the Supreme Court has agreed to consider hearing Orly Taitz Birth Certificate case.  It will be considered to go on the spring docket.


One can only Hope!

SDRII's picture

There is still an APB out for the former CFO

Carl Spackler's picture

Good point.  What is Howard doing these days?

PUD's picture

Off topic Tyler but per our discussion yesterday about individual "investors" fleeing funds....I think you have mis-characterized what has really taken place re: flight from managed mutual funds into etfs...

Investors have been piling into U.S. stocks at near record pace to start 2013.

a BofA Merrill Lynch Global Research report this week shows a $19 billion inflow into U.S. equity funds for the first full week of the year.

That’s the biggest surge since June of 2008 and the fourth highest since 2000, according to the report. Equities have seen inflows over the past 7 weeks, according to the report.

SheepDog-One's picture

Good! With retail investors finally jumping in, ridiculously at less than 5% from all-time highs, maybe the time for them to pull the rug out is near.

HD's picture

 You're a dog with a bone mate.

You might want to post a specific link for Tyler to respond to.  Assuming the same "Tyler" is on duty this morning...

Tyler Durden's picture

Again incorrect. The EPFR/Lipper data you are referring to consolidates institutionals flows. It also includes ETFs. The ICI data we compile is solely looking at retail flows (well, outflows) in/out of mutual funds.

And yes, institutional flows includes capital sourced, incidentally, as discussed here, from such places as excess deposits. So yes - there was an inflow, and a massive one at that, which is precisely what we observed in the post yesterday noting the surge in year end "savings" accounts which apparently you failed to read.

PUD's picture

I don't think you understand my point. For months you have detailed the exit of individuals from mutual funds giving the impression that there is a wholesale exodus underway. The articles i posted yesterday and this one today suggest that plenty of money is pouring into equities albeit using different vehicles.  I'm merely suggesting that all those posts about equity flight don't tell the whole story. That's all.

Tyler Durden's picture

And you are not getting the point that while retail investors are pulling money in droves out of stocks, as the ICI data shows, what actually is happening is that banks are then recycling this capital (which ends up primarily as deposits) as the Lipper data shows, right back into the markets. In other words, it is the same retail investors who are involuntarily funding the move higher even as they explicitly want to have nothing more to do with it.

LawsofPhysics's picture

If only they were buying physical instead of stacking paper promises.  < Sigh >  The institutional investors are where the majority of sheep (with a decent job) are trapped.  Their 401ks/401bs will be rehypothicated and none of these folks will know what happened until being retired to the FEMA camps when they realize that in addition to losing their nest egg, their currency won't buy shit.

So be it.  You can't fix stupid.  The old eCONomic paradigm is built on growth, which has benefitted from a 7% increase in the YoY flux of energy that flatlined in 2007.  Growth is no longer an option and the elite know this.

DaveyJones's picture

it's almost as if...the criminal government and the criminal institutions are working together to give a false impression of economic health in violation of rules that have either been torn down or...ignored

SmallerGovNow2's picture

ding-ding-ding-ding... you're a winner!

NEOSERF's picture

Which is all fine until our ATM's refuse to dispense.  Have only had the urge to pull thousands out of the bank and put under my mattress twice but feeling a third urge building..

MeelionDollerBogus's picture

Online ordering of affordable/ good value tools, food, etc., is like another kind of ATM: for tangibles. So long as the price is right (eBay probably is not), the balance is not frozen (locked out) then let the ATM be empty so long as delivery of the goods comes - then a bartering we go. OF course it's better to already HAVE one's barter-ready stuffs & preps before such an event, just sayin' ... try online ordering in the event ATM's are down just to see what you can get away with. Whatever comes back will be better than electrons you can't get cash for.

SheepDog-One's picture

Then why do you assume that YOUR stories are telling the 'whole story'? What's your point anyway, that there's never been a better time to BUY BUY BUY?

retiringteach's picture

public selling of funds, lack of ipo aqctivty last few years so so bullish- public buys strenth-wait til walter chornkite starts reporting djia at all time high-$ willl flood in-be long equity managers like t rowe price etc!!


Mercury's picture

Yes but do we know exactly (or even generally) which assets and to what extent the banks are buying with these deposits (after they have been transformed via repoed high quality debt or whatever)?...or is this buried under some general “investments” category and can only be inferred or dicovered post a JPM like blow-up?

jjsilver's picture

Treason by design,The evil behind the 14th Amendment


sudzee's picture

Is it real "money" if no-one wants it?

Dr. Engali's picture

Thank goodness for ZIRP, without it the bankers wouldn't be able to get a bonus and trickle down on us. Thank you old people and savers for taking one for the team.

madcows's picture

This is good news, right?  People are stockpiling cash in the bank instead of taking out more loans or putting it into risky FED inflated equities/bonds.  The people aren't going crazy like they did in the 90's.  Take that Banker Pukes.

N_Jones's picture

Isn't this the liquidity trap Keynes warned about..... Too much money setting inactive and not flowing through the slouces(sp?)



Seasmoke's picture

Good thing Paulson lied about what TARP would be for.

These dopes killed the biggest Golden Goose in history.

monad's picture

Economic warfare as conducted by the 3 stooges to replace physical money with central bank digital credits. EBT 2.0. Have you considered that EBT is a fat gift to the banksters from the criminal whores in all 3 branches of the federal government? Just like the Federal Reserve Act.

Seasmoke's picture

How many of the loans are underwater and worthless.

forwardho's picture

$176.5 billion, or the amount of excess total deposits ($976.1 billion) over loans ($799.6 billion

Knowing that these funds were IOU's printed on self igniting, unstable flash paper, should they keep them separate?

Or just stacked up on top of the rest of their gun powder.















devo's picture

Why did gold just take a massive dump?

toros's picture

So if the banks are using the reserves to buy equities why does this source show banks only owning 1% of the outstanding equities?

posted by Transitory