Jim Cramer spoke with John Stumpf, president and CEO of Wells Fargo (WFC) about the action in the bank stocks. Stumpf told Cramer that despite the problems in the sector Wells Fargo is till growing due to the bank’s capital strength, liquidity and operating model. He said there’s less competition because so many banks are trying to fix their balance sheets, while Wells Fargo is growing theirs. “These are not necessarily bad times for us,” he said. “We tend to outperform when times get tough.” Stumpf explained that analysts question Wells’ dividend increase, because the bank has strong revenue growth, solid earnings and a good long-loss reserve that will support the dividend hike. Cramer asked the CEO about the possibility of a government takeover of Freddie Mac (FRE) and Fannie Mae (FNM). Stumpf thinks the takeover would be a positive for the housing sector and the economy, but it wont impact Wells Fargo much. Stumpf also responded to a recent report from Oppenheimer & Co’s Meredith Whitney that claimed a change in th way Wells reports bad home equity loans is making the company looking better than it really is. “Wells changed the amount of time before the bank charges off defaulted home equity loans from 120 days to 180, the industry standard, giving Wells more of a chance to work with its customers, Stumpf said.” “So it was actually a customer advocacy, not anything about the income statement.” He explained the rule left off $268 million in charge-offs for the second-quarter, but Wells took a $3 billion writedown, half of which was for bad loans and the other half to build loan-loss reserves. He also pointed out only 5.5% of the bank’s assets are “Level 3″ debt. Cramer said Wells Fargo is the best bank in America. He said the stock is inexpensive and sells at only two times book value. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!