Wells Fargo Writes Down $1.4B / To Liquidate Assets

Posted by urbandigs

Tue Nov 27th, 2007 06:03 PM

A: Just out. Wells Fargo is the latest financial institution to announce more write downs and future actions related to the credit crisis. Whats very interesting here is that the company intends to liquidate their riskiest assets, even as the market for these products is in distress. That to me is a clear admittance of lack of faith in the housing / mortgage markets for the near to medium term.

According to CNN Money:

Wells Fargo will take a $1.4 billion provision in the fourth quarter for loan losses, the bank said Tuesday. The portfolio represents about 3 percent of Wells Fargo's loan balance, and the bank said the debt poses the biggest risk to its balance sheet.

In a filing with the Securities and Exchange Commission, the San Francisco-based bank said it will create an $11.9 billion portfolio of the company's riskiest mortgages, which it plans to liquidate. The portfolio consists of three types of home-equity loans, or additional money lent to homeowners who already have mortgages.
Wells Fargo stock (WFC: NYSE) is down just under 4% in after hours trading. Again, what is intriguing here is the intentions to liquidate ALL of their riskiest mortgages onto a secondary market that is still seized up. The company's eagerness to sell their holdings at such distressed levels is either a very smart move, or a very desperate one. Let's see how the market reacts to the continuing write downs tomorrow after a nice rebound rally today.