It also has a loan book heavily exposed to stressed housing markets. As a result, the government-projected losses could be bigger than the market's expecting. What's more, it only has a small amount of private preferreds -- around $6 billion compared with the government's $25 billion -- to convert to common.
Wells's stock is up a lot, so it could try issuing common shares to private investors if necessary. But if Wells Fargo is deemed to need more capital and markets don't play along, the government may need to convert its preferreds into a common equity stake.
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