Wells Fargo was in great shape, very little subprime, very little low doc (< 3% of portfolio) strong business lending, and much less lending in Inland Empire and Central valley of California.
Then Wells bought (or had to buy) Wachovia (Citibank was kicked out, maybe buy hte FEDS) Wachovia was in okay shape, EXCEPT they had bought Golden West about 2 years before, and Golden West portfolio was all variable pay loans, and other funny stuff.
Wells has the usual boat load of TARP money.
With near zero cost of funds, and not too many write downs outside of the Golden West crap, Wells is making money like mad.
Here's Wells plan to repay TARP with out selling new stock -
bigcharts.marketwatch.com
About 3 months ago, I did a crude back of the envelope calculation that came to the same conclusion - about one year(or less) of making money, and they capital ratios will be fine.
All this is well known. I expect this is a rumour from a short who needs to cover, or someone who want to buy cheap.
Maybe some hedge fund that had to get short, and could not short any of the bad banks, because their stocks are already borrowed and shorted, so the hedge fund shorted Wells. |
