Did anyone else the first financial institution to report its exposure to Lehman (LEH) was Wells Fargo (WFC), and they did so just hours after Lehman was toast?
Wells Fargo Reported in an SEC filing:
In connection with the filing today by Lehman Brothers Holdings Inc. (Lehman Brothers) of a Chapter 11 bankruptcy petition, Wells Fargo & Company (the Company) will record other-than-temporary impairment and take a non-cash charge to earnings in third quarter 2008 for investments in senior unsecured notes and perpetual preferred securities issued by Lehman Brothers. The Company’s investments in the notes and preferred securities are included in securities available for sale at a cost of approximately $90 million and $109 million, respectively. The notes currently trade at 25-30 cents on the dollar. The preferred securities currently trade at less than one percent of par value. The Company estimates that as of September 12, 2008, it had approximately $50 million of unsecured counterparty exposure to Lehman Brothers. The Company has no direct lending exposure to Lehman Brothers, and the Wells Fargo Advantage Money Market Funds do not have any direct exposure to Lehman Brothers
In other words, the Lehman filing is essentially irrelevant ti Wells Fargo and its shareholders. It kind of rains on the “systemic risk” scenario being bantered about on TV by the talking heads. Perhaps the risk is only systemic to those institutions that were careless, and that those who were not will simply end up in a better position after all this is over?
It does give the “let them fail” camp more ammo. This is not to say what is happening is a good thing, it is to say perhaps it is not the end of days scenario we keep hearing about.
Disclosure (“none” means no position):Long WFC, none
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One reply on “Wells Fargo on Lehman: "Tis But a Scratch"”
Wells Fargo and JPM always seem to be the first to confess their losses. They were also the first ones to fess up to their holdings of Fannie and Freddie pref shares a week ago or so. An indication of good corporate culture and leadership. Perhaps a bit of showing off as well. I suppose the acid test will come if and when they have to confess to a big write down.