Industry News

Chase, Wells Fargo say they can weather subprime storm

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Investors showed renewed confidence that financial markets will weather the subprime mortgage crisis after JPMorgan Chase & Co. and Wells Fargo & Co. reported write-downs on mortgage-related investments dented fourth-quarter profits but that the firms remain adequately capitalized. Standard & Poor's Ratings Service, however, said home-price declines and losses on subprime loans made in 2006 will be greater than expected, raising the specter of further tightening of credit to prospective home buyers. Shares of JP Morgan Chase and Wells Fargo both got a boost Wednesday after the companies disclosed that write-downs on mortgage-related investments were smaller than at some rival firms, and that both companies posted record revenue for the year. Although JP Morgan Chase wrote down $1.3 billion in bad mortgage-related investments during the fourth quarter, it managed to turn a $3 billion profit and boost credit reserves to $10 billion. Fourth-quarter mortgage loa...