Wells Fargo Tests Justice Department's Get-Tough Approach, so do investors care? On the margin yes and that's important. The whole Too Big To Fail bank sector is in a dull patch for investors, dull enough for G.E. to sell out it's finance assets and thus get out of the extra bank regulation hindering it's industrial products with sensors reporting performance business. Frankly, any TBTF entity should look at itself with the idea of spinning off units to take themselves out of government's dead hand of scrutiny. Having Senator Elizabeth Warren chew you out publicly is bad enough. But publicly defending such a loser business model focuses investors on the idea that if Wells Fargo's prospects are so bad that they have to resort to playing games then its needs breaking up.
The Economist September 17th 2016 Free Exchange | Stealth socialism:
Passive funds moderate reactions because they mechanically work at keeping a sufficient percent of company's stock in the portfolio to best represent its industry position and not its prospects. Yes these funds react but possibly not enough to cause active hedge funds to invest enough to force a break up.
FAIR GAME | Gretchen Morgenson
Brings up the point that Mutual Funds vote with management and so they too would be slow to react to Wells Fargo's poor prospects as well, especially if it was such a dullard that it had yet to determine the poor prospects of all TBTF institutions.
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