If Wells was running a matched book, interest rate issues would be irrelevant. Perhaps this is an attempt to eliminate long dated assets.
Perhaps these were credit risk issues, too, but with credit risks improving, and hedgible, this too is puzzling.
We need more information before drawing any conclusions.
* * * * * J B K * * * * *
San Francisco
Feb. 1 (Bloomberg) -- Wells Fargo & Co., unlike its three biggest competitors, is so convinced interest rates will rise that it sacrificed as much as $1 billion last year cutting back on fixed-income investments.
The nation's fourth-largest bank, whose biggest shareholder is Warren Buffett's Berkshire Hathaway Inc., reduced investments in mostly fixed-income securities by $34 billion in 2009's second half, company filings show. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. boosted their holdings by an average of $35.5 billion.
By scaling back on the so-called carry trade, in which banks borrow in overnight lending markets at rates near zero and invest in higher-yielding securities, San Francisco-based Wells Fargo aims to protect against losses when rates rise. The three other lenders increased investments on the theory that profit will outpace any future losses.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aM.IPx7G5hAw&pos=11
