Wednesday, July 3, 2013

Wells Fargo writes its own will

Wells Fargo is prepared to file for bankruptcy and sell off parts of itself if it gets into a crisis, the bank says in a plan made public by U.S. regulators this week.

The bank’s blueprint is part of so-called living wills that U.S. financial institutions have been required to provide to regulators since the financial crisis.

Under the Dodd-Frank financial overhaul act, bank holding companies with consolidated assets of $50 billion or more must submit the wills. In the event of another downturn, the wills are supposed to show how the institutions could be dismantled.

This week, the Federal Deposit Insurance Corp. published the plans of Wells Fargo and three other financial institutions with $100 billion to $250 billion in U.S. nonbank assets apiece. Banks with more in assets had to submit their wills last year.

In its 25-page plan, Wells Fargo says its parent company would file for Chapter 11 bankruptcy protection and likely seek to reorganize itself. The company would also consider selling its remaining businesses or liquidate its assets.

Wells Fargo’s primary subsidiary, its national banking operation, would be subject to FDIC receivership. According to the bank’s plan, Wells Fargo has “a range of sale and disposition options for the FDIC to consider.” The plan calls for Wells Fargo to be maintained as a whole, transitioned to another owner or broken up into parts that could be sold.

Wells Fargo has “planned for the rapid and orderly resolution” of itself “without government intervention or taxpayer support,” the will says.

The portion of Wells Fargo's will published by the FDIC is only the public section of its plans. By law, some parts of banks’ living wills are kept confidential.

The living wills have been criticized. In a New York Times story last year, bank analyst Mike Mayo called them “simply an exercise to make some people feel better.”

Also in the story, Dwight Smith, a lawyer who specializes in bank regulation, said banks who wind up in a crisis would be challenged to find buyers.

“The theory of the living wills is that a failing institution could sell its subsidiaries to some other buyers,” he said. “But the truth is that there wouldn’t be an obvious buyer.”

Bank of America, along with other financial institutions that have $250 billion or more in U.S. nonbank assets, submitted it resolution plan last year. Such institutions must submit a second plan by Oct. 1.


Erick said...

I can only help Hells Fargo dies a slow, ugly painful death. Good riddance.

John said...

Erick, as Bill Engvall would say: "here's your sign".

Wells Fargo employs more than 10,000 of your neighbors. Contributes millions to the local economy, both in salaries and in charitable giving.

Your ignorance is matched only by your prejudice and your hate, yet I'll bet you consider yourself a "tolerant liberal"!

Anonymous said...

John, get a grip. The corporate worship by you and your type is what has weakened this great nation to the core. Your type of thinking, a belief in exchanging the God of Govco with the God of the Corporation is nothing more than trading kne slave owner for another. If you truly believed in America and all it has stood for for the last two plus centuries, you would believe that those 10,000 people the corporation employs would not only survive but would THRIVE once pushed out of the corporate environment and in to a free market society that was based on sink-or-swim.

If only you would look in the mirror, you and your kind, and realize that Americans can be so much greater once they shake off the stench of corporate life and take full advantage of their God-given-gifts and this free market economy we have crated.

Don't trade one master for another, John. They are all the same with different names.

Anonymous said...

That's brilliant. Everyone should lose their jobs and.... make their own corporations! Moron...

Hawaiian Bob said...

From Anon 6:50 AM:

"...and this free market economy we have crated."


Anonymous said...

Anon 6:50am- why don't you ask the millions that are unemployed and cannot find work or do not qualify for business loans or any govt help how they feel about your comment?
Like it or not not all corporations or companies are bad, and many treat their employees well and help the communities they are based in. It is because of people who think like you that we find ourselves in the situation we are in today.

Anonymous said...

Wow...all companies are bad??? And where do you work? And I love the hatred of the banks. If Wells and BoA left town Charlotte would be the next Detroit.

Anonymous said...

I know, bigger government and smaller companies. Yeah, that's the ticket. Problem solved. Idiots.

Olde Geek said...

John makes some good points.
Anyone who banked with Wachovia hates Wells Fargo. They nickel and dime their customers to death. Many of their tellers are aloof and apathetic. Wachovia used to seem as if they valued your business.
It is a large employment center here in NC, and we certainly need the jobs here.
But as a nation, we cannot afford any more "too big to fail" financial institutions.

Anonymous said...

Walmart creates a lot of jobs as well. Should we worship at their feet? Why not eliminate all government entities at every level and put the direction of the nation in the corporation's hands?