Following The Bailout Money To Wells Fargo

(CBS)  Nearly four months later, how are banks spending bailout money? CBS News investigative correspondent Sharyl Attkisson takes a look at Wells Fargo.

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Wells Fargo hit the jackpot. It was one of the first banks to get bailout funds - the biggest amount awarded in a single shot: $25 billion tax dollars.

So how's all that money being used? CBS News asked repeatedly and Wells Fargo told us it is "positioned well to continue lending across all sectors and satisfying customers' financial needs, which is in the spirit of the Treasury's plan."

In other words, they didn't give specifics. And the fact is, neither Congress nor the treasury department required them to.

But there's one big change at Wells Fargo that's hard not to notice.

Troubled Wachovia has been bought out by Wells Fargo for $12.7 billion, creating the nation's second-largest bank in terms of deposits. But it might not have happened without the generous support of the federal government and your tax dollars.

Here's how. Last fall, in the span of just six days, Wells Fargo flip-flopped: first rejecting then accepting a deal to buy Wachovia.

What changed so drastically in less than a week? Two things.

First, Treasury Secretary Henry Paulson quietly issued a document revising the tax code, giving enormous benefits to some banks that buy other banks. For Wells Fargo, it could be worth up to $25 billion.

Then, Congress passed the giant bailout that would provide $25 billion in direct funds to Wells Fargo.

The very same day the bailout passed, Wells Fargo announced the surprise turnaround to investors: It would buy Wachovia after all.

On a call, Richard Kovacevich, the chairman of Wells Fargo, said: "This is of course a very exciting moment in the long history of Wachovia and Wells Fargo."

Wells Fargo became one of nine banks to receive bailout money and quickly close deals with other banks. The takeovers are so politically dicey that a Wells Fargo executive assured Congress his company did not use bailout funds to buy Wachovia.

"We completed our own capital raise to assure that we have the appropriate levels of capital to complete that transaction," said Jon Campbell, the CEO of the Minnesota region of Wells Fargo bank.

But nobody from Wells Fargo would explain how that squares with their press release from two weeks earlier. It says money raised by issuing stock and "the capital investment from the government" - that's the taxpayer bailout - "will enable us to finance the Wachovia acquisition."

And Wells Fargo may not be done. It's also said to be looking into possibly buying a piece of Swiss banking giant UBS, which got its own bailout - $60 billion - from the Swiss government.

[SISCO88]

I have had my mortgage since 1981. I have never had a late payment, my credit score is over 780, and my loan is paid up to date. Due to a loss of job and now a lower income, I thought WELLS FARGO would offer some help. I have sent many documents that W.F. requested, called over 125 different times, and have been jerked around and given different answers to the same questions. WELLS FARGO IS THE WORST COMPANY I HAVE EVER ENCOUNTERED! TOTAL LIARS! TERRIBLE WASTE OF LIFE!!

[balliml]

DIDO!!!!! The same thing is happening to us. We HATE Wells FARGO! I question if they even had the money when they bought our Mortgage. If that is the case do we really owe them any money?

[lilhillbilly78]

all i have to say is it's pretty sad when a family loses their home and the bank sends people to throw everything out into the yard..... and not being able to have their father to help, no dad, no place to sleep. throwing an infant and toddlers things out into the yard and stealing some of it as they went. no eviction notice. and a sad grandma in another state helpless. how cold. how can someone who has received billions to help them be so cold hearted as to throw baby and toddler things out into a yard, breaking things and causing them to lose things to theft because they are so COLD HEARTED!!!!!!!! GOD IS WATCHING!... SHAME ON YOU!

[akonitony]

My wife had a dental procedure done about year ago to relieve intense pain in her jaw where an abscess was forming and a tooth was cracked. She signed a contract with Wells Fargo for a no-interest/same as cash loan for the paying of the dentist. She was late on one payment which she thought she had made up, but had $145 left on the account as of the overall due date for the loan to be paid off by of Aug 23, 2010. She had been under the impression there would be interest charged on whatever balance was unpaid after this date, but they did not play fair here. They back-charged interest at 23.9% for the entire loan, which came out to a total of $285 added on to a bill we had thought we would be able to pay off with the last payment of $145. Now they say we owe over $430 when we were expecting to be below the $200 mark for sure. How about a bail out for us?

[akonitony]

My wife had a dental procedure done about year ago to relieve intense pain in her jaw where an abscess was forming and a tooth was cracked. She signed a contract with Wells Fargo for a no-interest/same as cash loan for the paying of the dentist. She was late on one payment which she thought she had made up, but had $145 left on the account as of the overall due date for the loan to be paid off by of Aug 23, 2010. She had been under the impression there would be interest charged on whatever balance was unpaid after this date, but they did not play fair here. They back-charged interest at 23.9% for the entire loan, which came out to a total of $285 added on to a bill we had thought we would be able to pay off with the last payment of $145. Now they say we owe over $430 when we were expecting to be below the $200 mark for sure. How about a bail out for us?

[akonitony]

My wife had a dental procedure done about year ago to relieve intense pain in her jaw where an abscess was forming and a tooth was cracked. She signed a contract with Wells Fargo for a no-interest/same as cash loan for the paying of the dentist. She was late on one payment which she thought she had made up, but had $145 left on the account as of the overall due date for the loan to be paid off by of Aug 23, 2010. She had been under the impression there would be interest charged on whatever balance was unpaid after this date, but they did not play fair here. They back-charged interest at 23.9% for the entire loan, which came out to a total of $285 added on to a bill we had thought we would be able to pay off with the last payment of $145. Now they say we owe over $430 when we were expecting to be below the $200 mark for sure. How about a bail out for us?

[BRGA]

Maybe I'm too idealistic...I thought the bailout was mostly for the people who needed help to regain financial stability in the economic crisis we all face. I guess the reality is that business as usual will go on despite the rhetoric of encouragement being spoon fed to us all the banks hold the money without true accountability or public safeguard.
Wouldn't it have been great if each of us had been handed a half million taxable dollars to secure our own bailout....taxes would have been paid,mortgages paid down or off, bills reduced, purchases made in other words businesses made more secure, jobs help in tact, homes retained and government revenue recaptured...maybe that would have been too logical. Oh wait, maybe not, as none of the above seems to be happening and a pile of cash has gone somewhere....kind of like the millions we were going secure from Iraq when we first went in...somehow that went away also. Who is being held accountable and who is gullable? I'm afraid the answer is no one and we are. Maybe it's time we all spoke out...loudly.

[jtoth1]

Katie, "BRAVO", you are no doubt the most intelligent, honest, ethical and responsible journalist around..very good article, facts and nothing but the facts! For all those denying the facts..read the definition of "crazy" in the dictionary..it is the denial of "reality", get some professional help, you need it. In addition I have never heard a criminal to date admit to their crimes, only blame everyone else and deny accountability, just as those above are. It is also important to note to these same individuals listed above thate that reporting the "FACTS" is not "SLANDER", but deliberately trying to ruin a journalists professional reputation by accusing her of reporting lies is "SLANDER AND LIBLE". There may be a common thread here with this example of you failing to use your brains before you open your mouth and the ignorance of Wells Fargos decisions. By the way,to the person that claims the government MADE Wells Fargo take the bailout money.. the government cannot and would not MAKE anyone take a loan, but even if this fantasy were true and Wells Fargo hated being forced to take this money, why would they not just turn around and pay it right back within the year now that it has been sitting in their bank account drawing interest and paying bonuses to their less than intelligent employees. You are NOT as intelligent as you "PRETEND TO BE", only extremely rude and manipulative. By the way to all of you who defend such unethical conduct, stop acting like others are "LESS THAN" you, you are "LESS THAN" others with your morals, ethicals and behavior.

[rlb734]

I grew up in an era that journalist's were willing to go to jail to tell the truth. Now they follow the political mainstream. No longer reporting what is really happening in our great country. But what some politician or political group tells them to report.

Wells Fargo got bailout money and I think the American citizen have the right and the company has an obligation to report back to us how this money was used to benefit the citizen of the United States.

My son had a Wells Fargo mortgage and lost his job. Now is working again. Wells Fargo did nothing to help with any facet of the time of job loss. THey have used our money and refuse to do what the money was intended for. Where are the safe guards. How can our government give money and expect no feed back. All should be under congressional review to determine what has happened with this money!

[classicrock765]

Wells Fargo turns down moeny from customers, read on...


A SAD TALE THAT NEVER SEEMS TO END

Analysts predict that the number of nationwide foreclosures for the year 2008 alone will reach one million. Meanwhile, Credit Suisse predicted that there will be 8.1 million foreclosed properties within the four-year period from 2009 to 2012.

I owned and operated a small business in Palm Beach County, Fl for 13 years. In our best years, we employed 15 people. Things started getting slower at the company a few years ago and the economic downturn finished the job. My company is out of business and the building I purchased approximately 5 years ago (for my business) is in foreclosure. The current principal mortgage balance is $499,000. The building has been on the market for over 2 years and the only offers ever received are listed below.

I have received three cash offers to purchase the building from October 2008 to present. My bank had rejected the first two offers and the third offer has been submitted and is pending. In October 2008, we received a cash offer of $350,000. The bank rejected this offer after having the building appraised. The bank claimed to have two appraisals, one at $460,000 and the other for $480,000. I informed my real estate broker that the offer was rejected and about the appraisals. The broker found another buyer in December 2008. The buyer was made aware of the banks appraisal and made a cash offer of $460,000. During the buyers due diligence period, the buyer requested the banks appraisal for $460,000.I requested the appraisal and the bank denied my request. My attorney requested the appraisal and the bank denied that request. The bank would not release the appraisal and said it was an internal document for the banks use only. The request for the appraisal continued until the buyer cancelled the contract. A new cash offer from the same buyer in March 2009 for $370,000 was received and is pending at the bank. If the bank accepts this offer, they will have caused themselves to needlessly lose $90,000. They will certainly sue me and my wife for the shortage. If the bank rejects this offer, they will foreclose on the property and sue my wife and I for the full amount owed. Since my house is cross collateralized, they will also foreclose on my home. It isn?t acceptable for any financial institution or company to make decisions like this. They?re turning down money but still asking for tax payer money (bail out). I believe this is common practice as these financial institutions have company policies that aren?t changing with our new economy. If there are 1,000,000 foreclosures and banks turned down $90,000 each (my scenario $460,000-$370,000), that would equal $90,000,000,000.

How can we provide tax payer bail out money to companies that are so mismanaged?
They?ll be back for more money unless the economy turns around fast or they change their internal practice of loan resolution. As the man who needed a heart was heard to say to his doctor, ?Get me the heart of a banker, i.e., one that has never been used.?

[spankieblue]

I lost my job through no fault of my own June last year. My job is in China. Wells Fargo was so kind to refinance my home for almost 11 percent for 40 years. The amount was 88k and the condo is worth about 72k now. I just can't afford this now and the loan was made under the pretense of saving me money by stopping a balloning payment. When you do the math I went from 30 years to 40 years of payments. I will be 98 when this condo is paid for. And they haven't saved me a penny. Predatory lending all the way. Not only that, but the credit cards I have with them have had the interest rates increased. I have made all payments on time but am being punished anyway even though Wells Fargo is the main company giving me a poor income to debt ratio. Robbing from the blue collar out of work poor man to give to the rich. Pitch forks.

[butterflync]

GREAT! I am a loyal Wachovia customer, and am NOT looking forward to Wells Fargo taking over and ruining a perfectly great bank. Wachovia''s customer service and banking products are grade A. From what I''ve read of Wells Fargo, it''s all downhill from here....