Wells Fargo & Co., the San Francisco bank that bought Wachovia Corp., reported a fourth-quarter loss this morning.
Wells is considered one of the country's relatively strong banks, and its loss is another sign that the credit crunch is leaving no bank untouched. Wells reported a loss of $2.55 billion, compared with a profit of $1.36 billion a year ago. The bank noted that it had raised reserve levels and incurred $74 million in costs related to the Wachovia integration. It also charged off $294 million in loans related to the Madoff scandal.
The income statements did not include results from Wachovia, which Wells bought Dec. 31. Had Wachovia remained a standalone company, it would have lost more than $11 billion in the fourth quarter, due to writedowns, reserve building, and investment-banking losses. Throughout 2008, the Charlotte bank lost almost $45 billion.
Wachovia's troubled Pick-A-Pay portfolio, which once stood at $122 billion, is now at about $94 billion. Wells is letting the portfolio of nontraditional mortgages, which were the source of many of Wachovia's troubles, run off. Earlier this week, Wells Fargo announced a new program for modifying mortgages of Wachovia customers, including those with Pick-A-Pay loans, to make them more affordable and to help borrowers avoid foreclosure.
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