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Wells Fargo Should Have Known Better

A year ago, Wachovia was on our list of problem banks. Apparently, it was not on the problem list of Wells Fargo, who bought the bank. (And to think that Citigroup wanted to "go to war" with Wells over parts of Wachovia.) Reminds me of the two countries that wanted to go to war over the Sahara desert.

Wells Fargo used to be the "star pupil" (among troubled banks). Now it is more like the student that is going to be "left back." Wells, unlike most banks, may not exit the TARP program because of the troubles of Wachovia.

One of the first things a kid learns is "You are known by the company you keep." This principle is applying now in spades to Wells Fargo.

It used to be one of the most profitable banks around, hence one of the favorite holdings of Berkshire Hathaway. Given his past track record, it's unlikely that Warren Buffett will dump the stock. But he must be disappointed.

Disclosure: Long BRK/A, BRK/B