Sunday, September 20, 2009

Wells Fargo Just Keeps The Shenanigans Going

This is a great article on the complete fraud that Wells Fargo Bank currently is.

If Wells Fargo did not consider CDS counter party risk when doing the due diligence when buying Wachovia, its out right fraud.

"One senior member of Wells Fargo’s commercial loan group who deals directly with the quandary, who spoke on the condition of anonymity, said, “One third of this commercial portfolio we took on from Wachovia is impaired and needs to be completely rewritten. I’ve just hired five more guys and we can’t keep up with the volume of defaults. Southeast Florida and Tampa are serious trouble spots.”

Absurdly Alarming

"Wachovia’s third quarter 2008 filings, which reflect their assets three days before Wells Fargo agreed to the acquisition, shows the bank held a whopping $230 billion in its commercial loan portfolio. Current figures show Wells’ 90-day defaults on its commercial portfolio are rapidly growing. According to data from WLMlab.com which tracks financial numbers that Wells files with its regulators, the bank’s Construction and Development portfolio, with $38.2 billion in loans, is defaulting at a level eight times greater than the rest of the nation’s banks, as of June 30th."

"Wachovia commercial loan officers who spoke to BankImplode say that the bank specialized in underwriting short-term loans up to five years during the credit boom of 2005-2007. The standard terms for such loans included interest-only payments on a floating rate with a huge balloon payment in the final year of the loan. If these loans cannot be refinanced, more waves of defaults are inevitable."

5 Years from 2005-2007 is 2010-2012. This bank is in serious trouble. If the economy tanks from here Wells will either be nationalized or file for bankrutpcy.

Furthermore, instead of outright selling these loans, they have modified the loan interest rate instead of the maturity, because if they do that, they would have to take impairment charges that hurts earnings, as well as bond ratings agencies would not downgrade tranches because of such impairments.

You just cant make this stuff up.

bankimplode.com/blog/2009/09/17/wells-fargo-s-commercial-portfolio-is-a-ticking-time-bomb-exclusive/

Clusterstock also points out that Wells Fargo is making the case that they are really AIG in disguise.

www.businessinsider.com/john-carney-is-wells-fargo-making-aigs-suicidal-mistake-2009-9

Well Fargo continues to lie about their derivative exposure to CDS counter party risk. Wells bought Wachovia, which effectively wrote CDS insurance on its own commercial real estate securitizations that they sold to investors. They continue to pull the rug over investors eyes with regards to off balance sheet risks and SIVS.

This is directly from their annual report:

In certain loan sales or securitizations, we provide recourse to the buyer whereby we are required to repurchase loans at par value plus accrued interest on the occurrence of certain credit-related events within a certain period of time. The maximum risk of loss represents the outstanding principal balance of the loans sold or securitized that are subject to recourse provisions, but the likelihood of the repurchase of the entire balance is remote and amounts paid can be recovered in whole or in part from the sale of collateral. In 2008 and in 2007, we did not repurchase a significant amount of loans associated with these agreements

Its AIG all over again, either Wells is oblivious to collateral call risk or they are just not disclosing it? What is it?

I am officially short Well Fargo.

I have posted many times the fraud that this bank is. Just do a search below for Wells Fargo.

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