Forcing Wells Fargo Into Tarp

http://www.futureofcapitalism.com/2009/10/forcing-wells-fargo-into-tarp

The whole question of how the banks were "forced" to accept government money is one that is worthy of some further investigation, I noted in an earlier post about a banker who refused TARP funds. The "forced" formulation has been used in connection with Wells Fargo, as I noted here; even Warren Buffett, as I also noted, bridled a bit at how the government set the terms of its loan to Wells Fargo under the TARP: "the government set the terms on it. They [Wells Fargo] just signed a blank piece of paper." Now Bloomberg News has a review of Andrew Ross Sorkin's "Too Big To Fail" that helps shed some light about the moment when Treasury Secretary Paulson brought the Wells Fargo chairman, Richard Kovacevich, in for a meeting:

When Kovacevich protested that his San Francisco-based bank didn't need its $25 billion slug -- "I'm not one of you New York guys with your fancy products," he's quoted as saying -- Paulson responded with a none-too-subtle threat of a regulatory crackdown, according to this account.

"You're going to get a call tomorrow telling you you're undercapitalized and that you won't be able to raise money in the private markets," Paulson is quoted as saying.

Mr. Buffett has also described Mr. Paulson as a "hero." These were some heroics.

by Editor  |  Oct 23, 2009 at 7:09 am Related Topics:  Banking, Capital Markets Regulation receive the latest by email: subscribe to the free futureofcapitalism.com mailing list