Following The Bailout Money To Wells Fargo

CBS Evening News: How A Big Bank Took American Tax Dollars And Went On A Spending Spree

(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.

[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....

[sporthd68]

Where is the help when we need it? In a Wells Fargo Bank! We got a loan for a 2006 Ford Focus from Wells Fargo, in 2007. Come to find out that the Local Car Dealer sold us a "Salvaged" car. We contacted Wells Fargo about this and told us that they don''t give a loan for "Salvaged" cars! Well they did! And now they will not help us take "Legal" action against are local dealership! Something not right here! Want to see more about Wells Fargo? Go to, http://www.complaintsboard.com/complaints/wells-fargo-auto-finance-c12371.html . You will see alot more complaints, and people wanting to know where the money is going. We are looking for an attorney that has experience in this field. Please don''t hesitate to contact me!
Thank You.

[vanicifer]

I think it''s finally time that you folks started laying off. You obviously do not check your facts; so why employ an army of assistants that are not adept at their jobs.
While we''re at it, maybe we cshould start limiting the compensation in network news rooms. How much money should we pay someone per year to regurgitate inacurate research and news?
True, reporting as a profession sure has gotten a lot sexier than it once was; but along the way it seems to have lost it''s credibility.
If newwork anchors went about their daily lives like the rest of us, perhaps they would be better at what they do.
Being paid millions to read someone else''s research, after the limo ride in; just does work in these tough economic times; and only serves to insulate you further. Talk about gigatic cabon footprints!
At least I can recycle my local newspaper as garden mulch!

[vanicifer]

You folks still don''t check your facts BEFORE opening your mouths?
Several well run regional banks did not really want the TARP funds, but the treasury insisted that they wanted certain "healthy" banks to remain that way.

Well''s Fargo & US Bankshares allowed the Teasury to purchase shares of Preferred stock with these funds, and to date, they are the only ones who have declaired a dividend on the Treasury owned shares.
Both of these banks have a long history of being very well run and conservative. Neither packaged loans into securities or purchased these.
Their earnings were predictable, rather than fantastic, over the past decade. They were responsible lenders.
Both have a history of servicing the loans that they generate, and early on in this mortgage crisis were offering options.

Being a conservative & responsible company, Well''s Fargo had every right to have second thoughts about
purchasing what amounted to a Gigantic Toxic Asset.

Katie and crew, in the words of John Stossel "GIVE ME A BREAK"!

[nltrosenbower]

Sensationalist journalism and the shallow level of facts covered has made people like rush limbaugh successful. I am writing because I take issue with the sensationalist tone in covering wells fargo so far.
Wells fargo and the people in charge are not perfect. They do appear to be more judicious than many bankers of this day and age. i am of a certain age and do not have much love lost for those in the financial business as part of the old "establishment" and i am more than concerned about the concentration of wealth and the ethics of wall street and the "good old boys"..
Analysts have found wells fargo, as well as 2 other regional banks to be healthy and more than likely to survive the financial crisis. wells fargo was mentioned as a bank likely to purchase weaker banks. some see the only problem being the price wells fargo may pay for the sins of their incautious peers.
Bush and Paulson pressured wells fargo into taking the first TARP money to dispel any stigma attached to the bail out. belief is that the ceo of wells fargo was not happy and paulson is sorry that things had to be done this way.
Wells fargo continues making loans and new mortgages available while increasing deposit accounts- with no intention of going back to the government for more money. bank of america and citibank have in order to cover their increased loan losses.
(see MPR.com archives for references)

[nltrosenbower]

Sensationalist journalism and the shallow level of facts covered has made people like rush limbaugh successful. I am writing because I take issue with the sensationalist tone in covering wells fargo so far.
Wells fargo and the people in charge are not perfect. They do appear to be more judicious than many bankers of this day and age. i am of a certain age and do not have much love lost for those in the financial business as part of the old "establishment" and i am more than concerned about the concentration of wealth and the ethics of wall street and the "good old boys"..
Analysts have found wells fargo, as well as 2 other regional banks to be healthy and more than likely to survive the financial crisis. wells fargo was mentioned as a bank likely to purchase weaker banks. some see the only problem being the price wells fargo may pay for the sins of their incautious peers.
Bush and Paulson pressured wells fargo into taking the first TARP money to dispel any stigma attached to the bail out. belief is that the ceo of wells fargo was not happy and paulson is sorry that things had to be done this way.
Wells fargo continues making loans and new mortgages available while increasing deposit accounts- with no intention of going back to the government for more money. bank of america and citibank have in order to cover their increased loan losses.
(see MPR.com archives for references)

[mas7935]

Unbelievable! Wells announced the merger with Wachovia 10/3. The Bailout passed 10/4. The meeting with Paulson where 9 banks were "convinced" they needed to take the money was around 10/26. So they didn''t know they would get this money until AFTER the merger was announced. Wells Fargo did not ask for bailout money. The government told them they had to take it. They didn''t need the money, didn''t want the money, but weren''t given a choice about taking it. If they can pay bonuses, reward employees, write off $2 million in Wachovia''s bad debt (saving that companies employees and shareholders) and still make a $3 Billion annual profit, they should be applauded and not be placed in the same category with the bozos who ran their companies into the ground and walked off with gazillions in their pockets, leaving there employees and shareholders in the dust. Shame on CBS and Katie for biased, slanderous reporting!!!

[rational_1]

I want my bailout as well. This economy has forced me to cut back on everything, including rent and insurance as well as FOOD!!
Posted by hologram5 at 08:54 AM : Feb 10, 2009

I''d MUCH rather bail you out than ANYONE who has already gotten money. What a royal cluster f.cuk this bailout nonsense is turning into.

[hologram5]

I want my bailout as well. This economy has forced me to cut back on everything, including rent and insurance as well as FOOD!!

[originalgamestr]

The corruption in big media and the incest within the ranks of journalism is not just a gross dis-service to the people but should be a warming to how a few have manged to wrangle enough power to distort truth on a mass scale to propel their agendas and egos.

This ''story'' was so blatantly contrived in response to the media machine''s disapproval with the Wells Fargo advertising taken out over the weekend. Journalism has rotted to new lows with many thanks due in part to CBS, Katie Couric and the bartender of this factless sensationalism; this disregard for pubic good for the sake of proving media''s importance over big-business is not isolated to reporting on industry. Put your egos in check CBS.

[originalgamestr]

The corruption in big media and the incest within the ranks of journalism is not just a gross dis-service to the people but should be a warming to how a few have manged to wrangle enough power to distort truth on a mass scale to propel their agendas and egos.

This ''story'' was so blatantly contrived in response to the media machine''s disapproval with the Wells Fargo advertising taken out over the weekend. Journalism has rotted to new lows with many thanks due in part to CBS, Katie Couric and the bartender of this factless sensationalism; this disregard for pubic good for the sake of proving media''s importance over big-business is not isolated to reporting on industry. Put your egos in check CBS.

[originalgamestr]

The corruption in big media and the incest within the ranks of journalism is not just a gross dis-service to the people but should be a warming to how a few have manged to wrangle enough power to distort truth on a mass scale to propel their agendas and egos.

This ''story'' was so blatantly contrived in response to the media machine''s disapproval with the Wells Fargo advertising taken out over the weekend. Journalism has rotted to new lows with many thanks due in part to CBS, Katie Couric and the bartender of this factless sensationalism; this disregard for pubic good for the sake of proving media''s importance over big-business is not isolated to reporting on industry. Put your egos in check CBS.

[originalgamestr]

The corruption in big media and the incest within the ranks of journalism is not just a gross dis-service to the people but should be a warming to how a few have manged to wrangle enough power to distort truth on a mass scale to propel their agendas and egos.

This ''story'' was so blatantly contrived in response to the media machine''s disapproval with the Wells Fargo advertising taken out over the weekend. Journalism has rotted to new lows with many thanks due in part to CBS, Katie Couric and the bartender of this factless sensationalism; this disregard for pubic good for the sake of proving media''s importance over big-business is not isolated to reporting on industry. Put your egos in check CBS.

[lewiston14]

Oh look morph got a new name rnbwprsm.

[perk235]

The author of this article is a mental midget and has something against Wells Fargo. Where did this writer get the facts? Wells Fargo did not put itself out of business by originating mortgages to people who could not afford them.
Posted by pope_suxdic at 02:36 AM : Feb 10, 2009
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The mortgage crisis was only the tip of the iceberg that opened up the DERIVATIVES CRISIS. All the major banks have huge derivatives risky bets (swaps) that were DEREGUALTED by Phil Gramm in the Commodities Modernization Act.

DERIVATIVES are the real weapons of mass destruction that were built right here in the USA. No need to spend $1TRILLION and soldier''s lives going after phantom ones.