Investors, It's Time to Bet on Banks

The big banks have different personalities. JPMorgan Chase is strong and steady. Wells Fargo is seen as the best managed and most innovative.

UPDATE: In the column below that appeared in the October 2016 issue of Kiplinger’s Personal Finance, I recommended all four of the largest U.S. banks. One of those was Wells Fargo. Since then, Wells has been embroiled in what can only be called a disgusting scandal. The bank fired 5,300 employees for opening about 2 million fake accounts, going back to 2011, and has announced that CEO John Stumpf will forfeit about $45 million in compensation as a sort of punishment.

Wells shares have dropped from $48 to $45 since I recommended them. Do I continue to recommend the stock? Absolutely not. Mistakes and individual misbehavior, I can tolerate, but systemic fraud, I can’t. It’s rarely an isolated event. Why own this tainted company when there are so many good ones out there?

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.