Wells Fargo: Housing worst since Great Depression

By Jonathan Stempel

NEW YORK (Reuters) - Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz), which has sidestepped many of the credit and liquidity problems plaguing U.S. mortgage lenders, believes the nation's housing slump is the worst since the Great Depression and is far from over, Chief Executive John Stumpf said on Thursday.

Stumpf said the second-largest U.S. mortgage lender and fifth-largest U.S. bank is "not immune" to the storm, but is well-positioned to ride it out, despite expectations for "elevated" credit losses from home equity loans into 2008.

He also said the San Francisco-based bank has "minimal" exposure to the collateralized debt obligations and other mortgage-related debt that have caused well over $40 billion of write-downs industrywide, with more expected.

"We have not seen a nationwide decline in housing like this since the Great Depression," Stumpf said at a Merrill Lynch & Co banking conference in New York.

"I don't think we're in the ninth inning of unwinding this," he continued, using a baseball reference. "If we are, it's an extra-inning game."

The gloomy outlook, from a bank considered among the best at managing risk through the recent market turmoil, weighed on investors, who pushed the Standard & Poor's Financials Index down 3.1 percent and S&P 500 .SPX down 1.3 percent. Wells Fargo shares fell 3.8 percent, dropping $1.28 to $31.97.

"There's just too much fear in the financials," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland."

Stumpf's comments came hours after Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz) announced a 1.3 billion pound ($2.7 billion) write-down for losses on securities linked to U.S. subprime mortgages.