Wells Fargo chairman calls federal response ‘asinine,’ un-American

Add Richard Kovacevich to the list of Minnesota bankers who are mad as hell about the government’s financial crisis response.

The Wells Fargo chairman blasted the Obama administration’s retroactive changes to the Troubled Asset Relief Program, and called its plan to stress-test banks “asinine,” Bloomberg reports.

Kovacevich said in a speech that when the nation’s largest banks were forced to take TARP funds in October, it sent a signal that the whole industry was weak. If Wells Fargo weren’t forced to take the TARP money, it could have been raising private capital at that time, he said.

(At that point, didn’t we already have plenty of signals the industry was weak? And given the country’s mood last fall, where was Wells Fargo planning to raise all this private capital?, asks the Business Insider blog.)

In a comment that earned him a cartoon in the New York Post, the chairman also suggested the retroactive conditions on TARP funds, including limits on pay and perks, are un-American:

“Is this America — when you do what your government asks you to do and then retroactively you also have additional conditions?”

Comments (5)

  1. Submitted by Don Medal on 03/17/2009 - 10:33 am.

    “forced to take TARP funds”

    by whom? and why didn’t the reporter ask this?

    If I missed an action by the previous administration that forced taxpayer money upon Wells Fargo, I apologize.

    otherwise, huh??

  2. Submitted by Don Medal on 03/17/2009 - 11:04 am.

    who forced these poor people to take TARP funds?

    I had thought it was a voluntary program.

  3. Submitted by Jim Spensley on 03/17/2009 - 11:59 am.

    Although I have been a Kovacevich admirer, but I agree with the previous comments. The Federal loans were accepted in the context that funny business had been going on in banks and investment banks and the managemnet had messed up.

    Kovacevich knew, or should have known, that rewarding the bankers involved was not going to sit well with the government or the consumer.

  4. Submitted by Joel Jensen on 03/17/2009 - 12:22 pm.

    If the supposedly clean-living Wells Fargo had not had its very own “asset valuation” issues it’s stock would not have lost 2/3 of its price between the fall of 2008 and today.

    Wells Fargo’s reliance on dubious net income increases in its Level 3 assets (valued under the mark-to-make-believe system) as reported by Jonathan Weil back in Aug. 22 2007 – Bloomberg*, tells me that while Wells Fargo may have not dipped as deeply or as promptly into the toxic-asset koolaid and it may have waited for a bit better vintage of securitized mortgage, the closer we look the more clearly Wells Fargo’s toxic-asset koolaid mustache appears.

    Of course they don’t want the stress test.

    None of them do.

    It’s kind of like having to go early to the beach after a long lazy winter of overeating. You know what’s under there, you’re just not crazy showing it off.

    But until we’ve seen Wells Fargo in its swim trunks, many of us will not trust that what we see is what we get when we buy their stock.

    And if the executives of the financial industry (e.g. AIG) had not through their reckless actions and tone-deaf attitudes proven to be the worst enemy of a real free market, then maybe these additional stipulations would not have been necessary.

    Frankly, the CEOs and executives from the entire financial services industry should stuff their outrage for the forseeable future. It does not hold a candle to the real rage being just barely contained by the millions of ordinary folks whose present and future have been hammered by the policies and practices of this industry for the past 7 years.

    As my Grampa used to say: If you’re skatin’ on thin ice, don’t go stampin’ your feet!

    * http://www.bloomberg.com/apps/news?pid=20601039&sid=aY8m0nta94GA&refer=columnist_weil

  5. Submitted by Joel Jensen on 03/17/2009 - 01:40 pm.

    Wells Fargo’s Kovacevich Speaks About Banks, Crisis

    Audio of Speech available here:

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aN.y57DeDlW8

    http://www.bloomberg.com/avp/avp.htm?N=video&T=Wells%20Fargo's%20Kovacevich%20Speaks%20About%20Banks%2C%20Crisis%20&clipSRC=mms://media2.bloomberg.com/cache/v.zWEKmuqInA.asf

Leave a Reply