Wells Fargo & Company (NYSE: WFC) is the bank that we said has replaced J.P. Morgan Chase & Co. (NYSE: JPM) as the safest of the money-center banks in America now. Wells Fargo just does not have all of that derivative exposure and does not get involved anywhere near as much in those proprietary trades (or “hedges” if you will). But there is a new question going around this morning: Is its mortgage influence just way too large now?

Bloomberg ran a piece last night (at midnight) noting that Wells Fargo’s grip on the mortgage market has set off alarms with regulators and with lawmakers. The fear is that with one-third of mortgage loans being controlled by Wells Fargo it could undermine markets and hurt consumers. Even in mortgage servicing, Wells Fargo is said to have more than 18% market share, and four firms have half of that market.

Bloomberg also noted that the high Wells Fargo concentration has “brought warnings from the inspector general for Fannie Mae and Freddie Mac, the head of Ginnie Mae, Fitch Ratings, and congressmen.”

What is interesting is that there are no real allegations that Wells Fargo has done anything wrong. Bank of America Corp. (NYSE: BAC) has tried to run away from its Countrywide debacle, and lending standards have tightened compared to the old days even if they are a tad looser today. Wells Fargo has even decided to in-house all of its mortgage efforts and is not going to do third-party mortgages in most cases.

Read also: The 7 Safest Banks in America

We would note that Berkshire Hathaway Inc. (NYSE: BRK-A) has been talking up the housing market, and Warren Buffett adds more and more Wells Fargo shares each and every quarter, if you review his holdings.

This is a bit of a conundrum. Wells Fargo has remained the healthiest of the big banks, or is at least the least tarnished after Jamie Dimon lost his open-mike abilities after the London Whale’s trading losses.

When the public reads about this much dominance it brings up questions over whether a moral hazard risk is just too big to ignore, even if the company under scrutiny has done nothing wrong. In short, it seems likely that in the future this dominance could only echo more breakup calls for the big banks and lenders. Back in the 1980s and early 1990s when so many banks had just failed, no single bank was anywhere close to this dominant. In fact, interstate banking laws prohibited the big banks crossing state lines for much of the time. That was then, this is now.

It is hard to imagine that a bank like Wells Fargo could be forced to divest (or worse) just because it has focused on its efforts, but in this day and age anything is possible.

JON C. OGG

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