Wells Fargo & Co. (WFC) Chief Executive John Stumpf said in an exclusive interview Tuesday that losses from the bank's Wachovia Corp. acquisition are "still in the same zip code" as Wells Fargo's original projections.

Stumpf also said the availability of 30-year mortgages favored by Americans depends almost entirely on the U.S. government's purchase of the mortgages from banks and lenders that originate them: "If it's not a government program, it's basically not getting done," Stumpf said.

In a wide-ranging interview with Dow Jones Newswires and The Wall Street Journal, Stumpf discussed the changes in consumer behavior since the financial crisis, and talked about how those changes affected banking. He couldn't say how durable this shift from spending to saving would be. But he expressed optimism that Wells Fargo could continue building capital from earnings with its diversified business model. He cautioned that improving bank industry returns would be tied to a decline in unemployment.

Wells Fargo, one of the strongest banks in the U.S. before the financial crisis, bought Wachovia Corp. without any government guarantees, and was subsequently judged during the Treasury's stress tests this spring to need an additional $13.7 billion in capital, which it since raised.

Wells Fargo reluctantly accepted $25 billion from the U.S. Treasury's Troubled Asset Relief Program last year; Stumpf declined to provide a specific timeline for re-payment, but reiterated it would seek to repay the funds "in a shareholder-friendly" way. He said TARP "is not impacting the way we run our company," and said, "I think we would have made it anyhow" through the crisis without the TARP funds.

Stumpf said Wells Fargo's ongoing merger with Wachovia "is on plan, on schedule and on budget." Wells has been hiring more bankers to staff Wachovia branches to cross-sell more products to Wachovia customers.

Wells Fargo structured its purchase of Wachovia to account for roughly $40 billion in losses it expected the Wachovia loans to eventually generate. Some investors have wondered whether losses from Wachovia loans will turn out to be higher than that $40 billion.

Stumpf said the bank had used $7.3 billion of those losses, and has "$30 billion in write-downs not used so far."

He said finding assets with attractive return remains the banking industry's main challenge. Utilization of commercial lines of credit remain at all time lows.

"We are not putting on 30-year mortgages at these rates," he said. Keeping 30-year fixed rate mortgages on the balance sheet is unattractive because a bank's funding is short term in nature and rising interest rates would inevitably cut into returns. The bank sells conforming mortgages to purchasers such as Fannie Mae (FNM) and Freddie Mac (FRE), and only keeps nonconforming mortgages, such as jumbo mortgages, which pay higher interest rates.

The financial crisis "is a life changing event" for many retail banking customers; "you'll see accelerated savings" until the employment situation changes, the CEO said.

A recovery of the banking industry's profitability "depends on what the consumer does," he said, and that the more boring banking will become, "the more I like it."

Wells Fargo disclosed Monday that it fired Cheronda Guyton, a senior vice president who allegedly used a repossessed home in Malibu, Calif., for private use. Wells had agreed with the owners that the bank would maintain the repossessed home but not put it on the market.

"It hurts," Stumpf said about the incident. The conduct was "totally in violation of our culture and our code," he said. The bank will review its policies for employees who deal with repossessed properties to make sure such violation does not happen again, Stumpf said.

-By Marshall Eckblad and Matthias Rieker, Dow Jones Newswires; 212-416-2156; marshall.eckblad@dowjones.com