Bank-Implode: Wells’ commercial book a time bomb
Teri Buhl has a interesting report on Bank-Implode today:
Not only do [Wells Fargo’s] outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank.
Wachovia, which Wells purchased last fall as it teetered on the brink of collapse, was so desperate to increase revenue in the last few years of its existence that it underwrote loans with extremely shoddy standards and paid traders to take them off their books.
There is much more in the article. Suffice it to say, Wells is in much deeper trouble than its executives are letting on.
By the way, Warren Buffett says he knows Wells Fargo’s book better than bank examiners and that the company is doing just fine. We shall see…