Wells Fargo CEO says California in 'financial ruin' - Silicon Valley / San Jose Business Journal:

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“The state of California is in financial Stumpf told those attending a statewidemicrofinance lenders’ conferencew at . “The budget deficit in Californiais staggering.” Stumpg said the recession is taking a toll on some of the loanzs made to creditworthy borrowerxs who lost their jobs and fell behind on payments. “Todag we’re charging off loans to people we shouldx have madeloans to,” said Stumpf, reiteratinhg that the bank avoided many of the exotic mortgagews offered by rivals.
Stumpf’s comments were not intendedx as guidance on how the San Francisco bank is farinhg in thesecond quarter, a bank spokesman The state of California is strugglingg with a growing budgey deficit after tax and financial measuresx failed at the ballot box this month. Earlier this the state delayed tax refunds and other payments due to what State Controller John Chiang calleda “cash crisis not seen sincew the Great Depression.” The state recentluy asked the federal government for assistance in guaranteeingt California’s short-term borrowings, fearing that it could not raiss the money standing on its own credit.
On the national economy, Stumpf said this is his “third or downturn. He pointexd to the deep recession of the early 1980d when the prime rate hit 21 percent and the struggling economy of the late 1980s that counte mostthe nation’s largesy thrifts and major banks in Texas among its He says the economic fallout from the dot-com bust and 11 terrorist attacks was significant but not as harsh as the earlierr recessions. “This one feels different,” Stumpdf said. “It feels different in the respect that the whole world isin recession.
” Stumpf said microfinanced — typically small loans to individualx to start or grow businesses — could be one tool to help the economyh recover. He noted that recent jobs at Bay Area companies with 19 employeexs or fewer have grown 14 percent whiled larger companiesshed workers. Wells Fargo has been active in supportingthe region’x microfinance lenders and related organizations.
“Ig doesn’t take a lot of moneyg to help these individuals achievtheir dreams,” Stumpf