The Real Story Behind Wells Fargo's Vegas Trip

Job well done!

Our government bureaucrates don't know who needs money or what plans are effective, but they are good at giving out "mandate."  You don't need my opinion, just mind you that a pre-capital system is working on "mandate," not a free market mechanism.

I would like to post your article at a Chinese forum if you could give me your permission.

I cannot believe Wells Fargo did not need the money. I am seeing lots of foreclosures of houses financed by Wells Fargo.

Well said, Chris!  I couldn't have said it better.

Shame on the Democrat-led Congress and Senate for writing up the bailout bill, shame on all those who voted in favor of it - from ALL parties, and shame on President Bush for signing it into law.  Now, shame on President 0bama and the more-heavily-slanted Congress and Senate for suggesting that those who were pressured into taking their ill-advised bailout money should not recognize those within their company who are making significant positive contributions to keep them financially solvent.

I have a hard time also believing that Wells Fargo didn't need the money...but I do believe that they didn't want Government meddling in thier affairs.  As for the Astronimical parties that the Ins. industry gives...They also could cut back to keep premiums lower.  I know they will say that is only a drop in the bucket...yea...What's their point?  Extravegence is extravagence!

Terry - you said,

"We all must remember that the former republican president is the one that fostered what has been happening to the financial sectors regarding the bailouts. The fact that Paulson was a former Goldman CEO, lends a lot to the argument that he and bush just basically gave money to anyone who held out their hands, most of which were the Wall Street thugs. The difference between that and our current administration is that formerly there were no restrictions, constraints or oversight"

Apparently you missed this:

"New Agency Proposed to Oversee Freddie Mac and Fannie Mae

By Stephen Labaton September 11, 2003

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

”There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,” Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

...

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.

And you also missed this:

Federal Housing Enterprise Regulatory Reform Act of 2005

The United States Senate May 25, 2006

Sen. John McCain [R-AZ]:

Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac – known as Government-sponsored entities or GSEs – and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

Did you happen to notice why there has been "no restrictions, contraints, or oversight?"

Yeah, I thought not.

There's a reason why the biggest beneficiaries of Freddie and Fannie largesse fought against "restrictions, contraints, and oversight."

In case you're still failing to make the connection between 0 and the corruption in the GSEs, see this video of a "family" event.

If I recall back in October, the government was planning on buying Wachovia for its prefered (too big to fail bank) citi group. Wells came in and bought Wachovia with out government money. Citi threatened to sue Wells.

I will say this about Wells, they are one of the few banks these days that are showing up at closings with money.

Nice blog. We are crossing a line that we may never recover from. It is very scary unless you are a champion of socialism which I am not.

Great job on this one.  I remember back when Wells Fargo wanted to buy up Wachovia and the Citigroup got upset.  I have an account with Wachovia which I plan to close because of this.  I don't like Citigroup or Citibank. I've done business with them in the past. 

Bob, Wells Fargo is buying Wachovia not Citigroup. Wells won Citigroup lost even though they got upset. I don't like Citigroup either. I would have preferred them broken up instead of bailed out. Wells is a good bank.

Re: Bernie Madoff the SEC is responsible for ignoring claims of ponte scheme and fraud for 8 years.

Interesting post.  I had heard that about Wells Fargo and still can't understand why Paulson would force bailout money on a firm that did not need or want it.  Wells Fargo certainly wouldn't have hurt the economy by not taking the money and the point made that they were doing fine says they were one of the bright spots in a down economy.  From the public's point of view the bailout money was supposed to help stabilize troubled institutions.