Photo: Alison Church
It turns out that there might have been more to the “personal reasons” that Wells Fargo cited as the reason Howard Atkins, the former Wells Fargo CFO, abruptly left the firm last week.Chris Whalen, an analyst, wrote in his recent report on Wells Fargo, in which he downgrades the bank from “neutral” to “negative,” that the CFO left because he’s involved in an “ongoing internal dispute” regarding financial disclosure, according to the Street.
The dispute has, according to Whalen:
“[Caused] some officials of [Wells Fargo], increasingly uncomfortable with the bank’s aggressive public disclosure regime, [to reach] out to regulators because of concerns regarding accounting issues.”
The accounting issues are related to the bank’s mortgage-related loan loss exposures, according to the analyst, who writes:
“While [Wells Fargo’s] peers among the largest banks have increased written and oral disclosure regarding loan losses and related data during the past three years, [Wells] consistently has stonewalled the investment and analyst communities.”
Whalen is said to have written a “strongly worded” 4 page report on the bank and said that its “public behaviour suggests significant problems in the bank’s internal systems and controls as defined by the Sarbanes-Oxley law.”
He suspects that Wells Fargo is reporting loss rates that are far too low.
“Simply stated, the loss rates are far too low compared with loss experience visible on RMBS and whole loans.”
This sounds an awful lot like the kind of stuff that went on pre-crisis. Click here to check out 11 examples of crazy things that happened inside banks before the financial crisis >
Read more about the report in The Street >
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