Wells Fargo 2010 Annual Report Download - page 103

Federal Reserve Board policies can significantly affect
business and economic conditions and our financial
results and condition. The FRB regulates the supply of
money and credit in the United States. Its policies determine in
large part our cost of funds for lending and investing and the
return we earn on those loans and investments, both of which
affect our net interest margin. They also can materially affect the
value of financial instruments we hold, such as debt securities
and MSRs. Its policies also can affect our borrowers, potentially
increasing the risk that they may fail to repay their loans.
Changes in FRB policies are beyond our control and can be hard
to predict.
Risks Relating to Legal Proceedings Wells Fargo and some
of its subsidiaries are involved in judicial, regulatory and
arbitration proceedings concerning matters arising from our
business activities. Although we believe we have a meritorious
defense in all material significant litigation pending against us,
there can be no assurance as to the ultimate outcome. We
establish reserves for legal claims when payments associated
with the claims become probable and the costs can be reasonably
estimated. We may still incur legal costs for a matter even if we
have not established a reserve. In addition, the actual cost of
resolving a legal claim may be substantially higher than any
amounts reserved for that matter. The ultimate resolution of a
pending legal proceeding, depending on the remedy sought and
granted, could materially adversely affect our results of
operations and financial condition.
For more information, refer to Note 14 (Guarantees and Legal
Actions) to Financial Statements in this Report.
Risks Affecting Our Stock Price Our stock price can
fluctuate widely in response to a variety of factors, in addition to
those described above, including:
• general business and economic conditions;
• recommendations by securities analysts;
• new technology used, or services offered, by our
competitors;
• operating and stock price performance of other companies
that investors deem comparable to us;
• news reports relating to trends, concerns and other issues in
the financial services industry;
• changes in government regulations;
• natural disasters; and
• geopolitical conditions such as acts or threats of terrorism or
military conflicts.
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