Wednesday, February 04, 2009

Now This Is Just Stupid

Really, the witch hunt atmosphere emanating from Washington is getting to be a little much: Backlash sinks Wells Fargo junket

Wells Fargo & Co. abruptly canceled a pricey Las Vegas casino junket for employees Tuesday after a torrent of criticism that it was misusing $25 billion in taxpayer bailout money.

The company initially defended the trip after The Associated Press reported it had booked 12 nights beginning Friday at the Wynn Las Vegas and the Encore Las Vegas. But within hours, investigators and lawmakers on Capitol Hill had scorned the bank.

Alright, I'm calling bullshit. Yes, firms that went with begging hat in hand to feed out of the public trough can be fairly criticized, but Wells Fargo isn't one of those companies. As has been reported, they were forced by the federal government to participate in the TARP foolishness.

"During the discussion, the most animated response came from Wells Fargo (WFC) Chairman Richard Kovacevich, say people present. Why was this necessary? he asked. Why did the government need to buy stakes in these banks? Morgan Stanley (MS) Chief Executive John Mack, whose company was among the most vulnerable in the group to the swirling financial crisis, quickly signed.

Bank of America's (BAC) Kenneth Lewis acknowledged the obvious, that everyone at the table would participate. "Any one of us who doesn't have a healthy fear of the unknown isn't paying attention," he said."

It continues:

"Mr. Paulson said the public had lost confidence in the banking system. "The system needs more money, and all of you will be better off if there's more capital in the system," Mr. Paulson told the bankers. After Mr. Kovacevich voiced his concerns, Mr. Paulson described the deal starkly. He told the Wells Fargo chairman he could accept the government's money or risk going without the infusion.

If the company found it needed capital later and Mr. Kovacevich couldn't raise money privately, Mr. Paulson promised the government wouldn't be so generous the second time around."

Essentially this is like Don Corleone "making the banks an offer they can't refuse". The message was "make me your partner now, if you don't and need me down the road, we will crush you".

No one can claim that Wells Fargo has been anything other than a good and solid company. They did not expose themselves to the insane risks a lot of the other companies did, and so they shouldn't be treated now as if they had done something wrong.

Indeed, they did the American people a favor by buying what remained of Wachovia back when Citigroup was attempting to buy it with taxpayers footing the bill. Additionally, Wells Fargo made money this year. If they want to treat their employees well as a bonus for their hard and profitable work, what is wrong with that? Besides, why should the Wynn Hotel & Casino be deprived of its business? Are the people there unworthy of keeping their jobs? Well, if we make it impossible for businesses to book events like this lots of people will be laid off.

In the end, we don't need the neo-Puritans in Washington telling Americans what is "morally acceptable."

1 comment:

Mloger said...

Why do we all think we know better? Do you run a billion dollar company? how about a bank? We should have never gone down this road and this is exactly why.

The forcing of some banks into taking the money is very under reported. It has to be covered more. What else will they force?