IPFS News Link • Federal Reserve
Wells Fargo Under Increasing Scrutiny Over its Assessment of its Loan Portfolio
• American Banking NewsAs for those that performed examinations of the company books, they were evidently astounded at the extraordinary possibility of the problems that could come about from home mortgage and commercial loans, as well as in the credit card sector; all of which seem to be understated by management as to how bad things really are in those loan areas.
This doesn’t even include the tremendous exposure of Wells Fargo to the derivatives portfolio of trades it took on when it acquired Wachovia, which includes its own ticking time bomb. Warren Buffett, whose company Berkshire Hathaway is invested heavily in Wells Fargo, has called derivatives in the past “financial weapons of mass destruction,” and he’s correct, and Wells Fargo via its acquisition of Wachovia is sitting on an even bigger pile of them.
The bottom line in all of this is Wells Fargo may not have close to enough cash on hand to deal with the situation, and may need a lot more before all of this is over.