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UnNightly News: Drama at Wells Fargo

February 16, 2011

Piecing together recent events at Wells Fargo Bank has been interesting, but worthy of a post. Here’s the gist of things.

On February 8, 2011, CFO Howard Atkins resigned his position at Wells Fargo Bank for “personal reasons.” Today on Bloomberg Street Smart guest Chris Whalen, of Institutional Risk Analytics, stated he had reservations as to the reason and thought the underlying reason had to do with internal conflicts over financial disclosure policy at WFB. This has to do with how defaulted loans have been disclosed and how great the losses actually are and if there has been some hedging of disclosure to make WFBs earnings look better than they are in reality.

I read several articles today about how Atkins will reap $9.25 million in deferred compensation and $13.3 million in restricted stocks and options. Perhaps he is getting out while the getting is good. If so, he knows something but he is not saying and that does not bode well for Wells Fargo. When industry experts question what is going on, we need to take notice. However, Warren Buffett dumped his BofA stock today and bought Wells Fargo.

Eventually we will know what’s what, but in the meanwhile, I would err on the side of caution as many large banks are still unwinding bad home loans and subject to market forces. The real question is how many of those bad home loans are still sitting on WFB’s books?

Categories: Economy
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