Wells Fargo (NYSE:WFC) in Major, Internal War Over Disclosure

An internal war is being waged at Wells Fargo (NYSE:WFC), according to Institutional Risk Analytics analyst Christopher Whalen, the apparent real reason Chief Financial Officer Howard Atkins unexpectedly resigned.

The war, according Whalen, is centered around the disclosure practices of the bank, which the bank claims (and has contacted regulators over) as being too aggressive.

Atkins sudden "resignation" is still said to have nothing to do with disclosure or the financial condition of the bank, according to Wells.

The explanation of Atkins departure was said to have been for personal reasons.

Whalen said in a note to clients, “The departure of Atkins, we are led to believe, was not merely the result of personal issues, but reflects an ongoing internal dispute within (Wells Fargo’s) executive suite regarding the bank’s disclosure.”

He also said the “public behavior suggests significant problems in the bank’s internal systems and controls as defined by the Sarbanes-Oxley law. We further understand that some officials of (Wells Fargo), increasingly uncomfortable with the bank’s aggressive public disclosure regime, have reached out to regulators because of concerns regarding accounting issues.”

Whalen also said concerning the reporting of mortgage-losses at Wells Fargo (and Bank of America (NYSE:BAC) as well), don't line up with the loss rates from residential mortgage-backed securities.

In other words, said Whalen, "the loss rates are far too low compared with loss experience visible on RMBS and whole loans.”

Whalen slashed his rating on Wells from "Neutral" to "Negative" on the uncertainty.

Wells Fargo closed Tuesday at $33.68, dropping $0.19, or 0.56 percent.