[FIRST BANK SYSTEM, RICHARD A. ZONA, VICE CHAIRMAN
                   AND CHIEF FINANCIAL OFFICER, LETTERHEAD]

          January 22, 1996

          BY FACSIMILE AND FEDERAL EXPRESS

          Mr. William E.B. Siart
          Chairman and Chief Executive Officer
          First Interstate Bancorp
          633 West Fifth Street, TC 2-10
          Los Angeles, California  90071

          Dear Mr. Siart:

          Further to our telephone conversation yesterday and this
          morning's announcement that First Interstate Bancorp had
          commenced discussions with Wells Fargo & Company with
          respect to a possible merger between First Interstate and
          Wells Fargo, I am writing to advise you that First
          Interstate is in material breach of its continuing
          obligations under the Merger Agreement between First
          Interstate and First Bank System, Inc.

          Sections 6.1 and 6.4 of the Merger Agreement require
          First Interstate to use its reasonable best efforts to
          obtain regulatory and shareholder approvals of our
          merger, and to take all actions necessary, proper or
          advisable to consummate and make effective, as soon as
          practicable, the transactions contemplated by the Merger
          Agreement.  In our view, the failure of First Interstate
          to release as scheduled the results of the Gallup survey
          of customer preferences showing significant
          dissatisfaction with a prospective Wells Fargo/First
          Interstate combination, and the cancellation by First
          Interstate's counsel of the previously scheduled
          deposition of Mr. Zuendt without consultation with us are
          each examples of acts in direct contravention of the
          foregoing obligations.  While the Merger Agreement
          permits First Interstate to engage in discussions and
          negotiations with Wells Fargo to the extent required by
          the fiduciary duties of First Interstate's Board of
          Directors, this freedom in no way diminishes First
          Interstate's obligations under the Merger Agreement.

          We further believe that First Interstate's announcement
          today may constitute an implicit withdrawal of its
          Board's recommendation of our merger.

                                             Very truly yours,

                                             /s/ Richard A. Zona
                                             Richard A. Zona

          cc:  William J. Bogaard, Esq.
               First Interstate Bancorp


               Fred B. White, III, Esq.
               Skadden, Arps, Slate, Meagher & Flom