Two smart and meticulous financial analysts – Reggie Middleton and Mish – argue that Wells Fargo is insolvent.

In yesterday’s update to his June 11, 2008 analysis, Reggie shows that the lion’s share of Wells Fargo’s assets are in mortgages in the California, Florida and Arizona markets, which are all tanking. He concludes:

Wells Fargo has an impaired balance sheet. Marking mortgage assets ANYWHERE near what they are worth results in insolvency.

Mish, who has also been covering Wells for a long time, wrote on February 2nd that Wells is drowning in loan defaults, and has hidden staggering amounts of toxic losses off of its balance sheets, just like Citigroup:

[Despite its claim that it is saving mortgages by reworking their terms,] 30% of Wells Fargo’s reworked mortgage loans are 90 days past due or longer, one year after loan modification. ***

Wells Fargo claims it is “well capitalized”. Is it? By what measure? What is hidden off its balance sheet that we do not know enough about? Can anyone believe what any financial institution says when it is perfectly clear all these games are being played?

It’s not just Citigroup and Bank of America that are in trouble . . . other big banks like Wells are also on the ropes.