In a 10-K SEC filing today, Wells Fargo said, "[T]o maintain an investment rating of AAA for certain funds, we elected to enter into a capital support agreement for up to $130 million related to one SIV held by our AAA-rated non-government money market mutual funds. We are generally not responsible for investment losses incurred by our funds, and we do not have a contractual or implicit obligation to indemnify such losses or provide additional support to the funds." The company's filing continued, "Based on our estimate of the guarantee obligation at the time we entered into the agreement, we recorded a liability of $39 million in 2008. While we elected to enter into the capital support agreement for the AAA-rated funds, we are not obligated and may elect not to provide additional support to these funds or other funds in the future."
Wells Fargo becomes the 12th advisor to publicly disclose support and accounting losses to protect troubled securities in its money market funds. To date, Columbia, Credit Suisse, Evergreen, First American, Janus, Morgan Stanley, Northern, SEI, STI, TDAM, and Western have all disclosed money fund support actions from parent advisory firms. Wells holds $105 billion in money fund assets, including the $22.3 billion Wells Fargo Advantage Cash Investment, the $12.5 billion Wells Fargo Adv MMF, the $9.5 billion Wells Fargo Adv Prm Inv MM I, and new 13 bps Wells Fargo Adv Heritage Select. The company held $1.0 billion in three SIVs as of Feb. 1, said the filing.
Additional stories: Reuters' "Wells Fargo incurs $39 million loss from money funds".
