another bank's confession...

Wells Fargo Plunges Into Mortgage Muck

Wednesday November 28, 1:01 am ET
By Michael Liedtke, AP Business Writer
Wells Fargo Plunges Into the Mortgage Muck With $1.4B in Losses on Home Equity Loans

SAN FRANCISCO (AP) -- After avoiding major trouble most of the year, Wells Fargo & Co. has finally bogged down in the mortgage muck that's muddying one major bank after another.

Wells Fargo, the fifth-largest U.S. bank, waded into the mess by saying it will recognize $1.4 billion in losses in the fourth quarter on home equity loans that aren't being repaid as the real estate slump deepens in California, the Midwest and other major markets.

ADVERTISEMENT
click here
Until Wells Fargo's disclosure late Tuesday, the San Francisco-based bank had been largely unscathed by the turmoil that has battered a long list of other major lenders.

"Clearly, this is a disappointment because (Wells) had been seen as better managers of credit than many other big banks," said RBC Capital Markets analyst Joseph Morford. "But now they have a big blemish on them, too."

After gaining 34 cents to finish at $29.83 in Tuesday's regular session, Wells Fargo shares plunged $1.40, or 4.7 percent, in the extended trading that followed a Securities and Exchange Commission filing outlining the bank's home equity loan losses.

"Maybe people are going to be freaked out about Wells Fargo's losses, but they shouldn't be," said Punk, Ziegel & Co. analyst Richard Bove. "Wells Fargo isn't superhuman and they made some bad loans just like everyone else."

Wells Fargo still remains in far better shape than many of its peers because it sold most of the $2 trillion in home loans that it originated since 2001 and invested relatively little money in the mortgage-backed securities that are lumping other big banks with multibillion-dollar losses.

The first whiff of Wells Fargo's home equity woes surfaced last month when the bank reported it lost $153 million on the portfolio in the third quarter, up from $27 million at the same last year.

Wells Fargo's chief executive, John Stumpf, spooked investors even further two weeks ago when he described the current real estate slump as the worst since the Great Depression and reiterated earlier projections that the bank's home equity losses would continue to rise next year.

所有跟帖： 

• 还差最后一个JPM没有伏法 -暗自偷笑- ♂ (0 bytes) () 11/27/2007 postreply 22:19:21

• it's just a matter of time. -tafa- ♂ (0 bytes) () 11/27/2007 postreply 22:31:42

• 看丫还能撑多久 -暗自偷笑- ♂ (0 bytes) () 11/27/2007 postreply 22:49:44

• JPM will lose some money on Chase 2nd loan -CALoanAgent- ♂ (116 bytes) () 11/28/2007 postreply 10:04:44

• Wells Fargo normally very conservative in lending. This is bad n -yogiho- ♂ (50 bytes) () 11/27/2007 postreply 22:20:13

• would the fed take their bad assets and give money to them?回复：We -tafa- ♂ (2 bytes) () 11/27/2007 postreply 22:33:33

• I don't think the fed will let them go under. -yogiho- ♂ (0 bytes) () 11/27/2007 postreply 22:59:41

• This year is only the beginning of the end. -山高月小- ♂ (404 bytes) () 11/28/2007 postreply 06:30:45