FRESH OUT OF COLLEGE 31 YEARS AGO, John Stumpf landed a job as a repo man in Minneapolis. He would show up at the bank at 10:00 a.m. and work the phones until 5:00 p.m. trying to track down borrowers whose auto loans were past due. Then, after a short break for dinner, he would change into casual clothes and head out to hunt down and seize cars, often long past midnight.

"When you collect bad loans," says Stumpf, "you sure learn a lot about making good ones."

That streetwise education has served Stumpf, 54, well. Perhaps nothing could have prepared him better for the challenges he faces today as CEO of Wells Fargo & Co. In late June, when he succeeded retail banking legend Richard Kovacevich, things were looking rosy enough. The bank was finishing a record second quarter that would produce $2.28 billion in net income, 9 percent better...