Wells Fargo's Kovacevich: The Importance of Hitting Bottom

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A $23.7 billion third-quarter loss drove down Wachovia's stock Todd Sumlin/Charlotte Observer/MCT

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Are you still troubled by the government taking a stake in Wells Fargo?
I really can't talk about confidential conversations with regulators and government officials. But the issues that were involved here were much more broad than what has been reported, and I've never had an issue with doing what is in the best interest of the economy and the industry even when that may be somewhat negative to Wells Fargo on a short-term basis.

How significant are the stakes in the banks? Up to 30%?
No, no. Not with the large banks, at least. It's really preferred stock that's not convertible, which I think will not only be repaid by all these banks but will be repaid in a way that will likely gain a profit for the U.S. government.

If the government is going to buy into banks, why not autos, why not airlines?
It's important to invest in the banks because banks are the grease that keeps the real economy moving. If there is no financing available for corporations, for consumers, for municipalities, if that does not exist, then no industry can be successful, right? You've got to have that backbone. And that's what you have to do first. Who else you do it with, or for, is for other people to decide. But I think almost everyone agrees, until you fix the financial system, helping others won't make a difference.

JPMorgan (JPM) has quietly said it's ready to do another deal. Is Wells Fargo?
No. The deal [for Wachovia] hasn't even been completed yet. So we will be spending 100% of our time on the successful integration of Wachovia.

Well Fargo has stayed very strong relative to your competitors. Why?
We just didn't make some of the mistakes that others did. We still made some mistakes, and that's very unfortunate. In some cases, we should have known better. In general—and I don't know if I take much pride in this—we're probably the least ugly of the ugly ducks because we did not participate in some of the excesses, particularly related to subprime borrowers and [collateralized debt obligations] and highly leveraged loans.

What would your advice be for the next President, who will inherit a deeply damaged financial system and a troubled economy?
Priority No. 1 is to get the economy going. This is the worst financial crisis since the Depression, but it is far from the worst economic crisis. Simultaneous with that, we have to figure out a way that we don't continue to have these bubbles. Therefore, we have to look at regulating differently. Some people have called that regulating more, some think deregulation is to blame [for the crisis]. I think it is really a matter of doing things differently than we have done in the past.

Maria Bartiromo is the anchor of CNBC's Closing Bell.