Wells Fargo & Co.
Banks are maintaining standards and nobody is doing the kind of subprime lending that prevailed before the 2008 credit crisis, Sloan said today during a Bloomberg Television interview. San Francisco-based Wells Fargo is the largest U.S. mortgage lender.
“Whenever you see a double-digit rise in the valuations of any asset, whether it is a house or stock or anything, it is cause for some level of concern,” said Sloan. “Overall, when you look at home prices relative to where they peaked in 2006 or 2007, we have a fair ways to go.”
Wells Fargo is among the largest beneficiaries of the housing market’s rebound. Home prices rose 11% in March from a year earlier, the most in seven years, according to the S&P/Case-Shiller index of property values. That’s prompted speculation that another bubble has formed and that it could pop if interest rates rise.
The Federal Reserve has been buying bonds to hold down rates and help the economy. The resulting drop in mortgage rates to record lows has led borrowers to refinance existing loans or purchase new homes.
While home lending probably will slow as rates rise, the mortgage market will stay strong this year, Sloan said. An easier-to-understand mortgage market, led by simpler loan applications, may help, he said.
Wells Fargo, which is also expanding its investment bank, doesn’t need to buy another firm to compete with the largest in the industry, Sloan said. The bank would be a logical buyer for a boutique investment bank such as Greenhill & Co., Mark T. Williams, a former Federal Reserve bank examiner, has said.
“We are very happy with the progress we have had in terms of growing the business,” Sloan said. It’s a “big opportunity for us,” he said. Still, “we do not need to make acquisitions in the investment-banking business to grow.”
