We Called It: Wells Fargo's Securities Foray

Indeed, Wells initially said it was winding down most of Wachovia's investment banking division. Top executives indicated that Wells would only hold onto Wachovia's vast network of broker-dealer branches, and operations that would build out its own capacity for plain-vanilla services. Those include products like interest-rate protection, foreign-exchange services and access to capital markets via mutual funds and the like.

"With Wachovia we have doubled the customer base where we can apply the Wells Fargo model," CFO Howard Atkins said during a conference call in April.

Atkins said that, unlike competitors in the investment and commercial banking spheres, Wells just wanted to earn fees from helping customers -- not operating heavily in the capital markets or overseas. A tight lid would be kept on risk-taking, as Wells wound down Wachovia's more exotic positions.

Shortly after the acquisition, CEO John Stumpf had assured investors that activities like commercial banking and investment banking -- functions that are dominated by big players like Goldman Sachs (GS Quote), Morgan Stanley (MS Quote) and JPMorgan Chase (JPM Quote) -- were on the chopping block.

Wells was "not interested in businesses that are just there for proprietary trading or other investment activities -- money and money, if you will," Stumpf said at a conference in December. He added that such operations were "not compatible with our organizational structure and in our operating model and vision and values."

But since then, a picture has slowly emerged of a firm that drank the profit Kool-Aid and wants another sip. Wells is now hoping to expand its presence in mergers and acquisitions, advisory services, fixed-income trading, research, sales, syndications and underwriting, in addition to the retail brokerage network.