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," he 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 a 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.

Stumpf also addressed his bank's announcement Monday that it had fired Cheronda Guyton, a senior vice president at the bank who allegedly used a repossessed home in Malibu, Calif., for private use.

"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 a violation doesn't happen again, Stumpf said.

Wells Fargo had repossessed the waterfront property from a distressed client who had lost money in disgraced financier Bernard Madoff's Ponzi scheme, according to the Los Angeles Times.

Stumpf said the bank had agreed with the owners that the bank would maintain the repossessed home but not put it on the market for a specified period of time. A spokeswoman for Wells Fargo told Dow Jones Tuesday that the agreed-upon period of time has expired and the property is now listed for sale.

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 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 returns 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.

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