Wells Fargo Bank Safety Fact Sheet

1. Bailout Amounts and Placement on the FSB List of Too-Big-To-Fail Banks

Wells Fargo received $25 billion in bailout funds1 in the 2008-09 financial crisis.

Wells Fargo is listed by the Financial Stability Board as a systematically important financial institution2. The Financial Stability Board is an international body that monitors3 the global financial system and is made up of members from the G20 nations.4

  • In November 2012, the Financial Stability Board listed Wells Fargo as one of 28 banks whose failure could cause serious systemic financial/economic problems.5

  • Wells Fargo's placement on the list is in the third tier used for 2012, which indicates that it is among the 14 most critical financial institutions in the global economy. Banks in this category are required by the FSB to have a level of capitalization that is quite low, at 1.5%.

  • FDIC Vice Chairman Thomas Hoenig, testifying before the House Financial Services Committee on June 26, 2013, said the biggest Wall Street banks are “woefully undercapitalized,” while calling the industry underpinnings a “very vulnerable financial system.”

 

2. Derivatives Holdings

  • Wells Fargo holds $3.928 trillion (notional value) in derivatives, and appears in position 6 of 25 top banks holding derivatives.6 During Chapter 11 bankruptcy in the U.S., derivatives counterparties receive "super-priority" status above all other creditors, including depositors. This means that derivatives counterparties will get all of the bank's assets before any other creditors, including depositors, are paid.7

  • Due to the contagion effect8 of our fractional reserve banking system and Wells Fargo's investments in derivatives, deposits held with Wells Fargo may be vulnerable. Wells Fargo's failure could have a significant impact on our economy in Washington, DC. As noted below Wells Fargo holds a significant share of deposits for the government of DC.

7 Princeton Law Review, Prof. Mark J. Roe, The Derivatives Market's Payment Priorities as Financial Crisis Accelerator: http://www.naic.org/documents/committees_e_receivership_110819_comments_mo_doi.pdf

8 Chris Martenson Peak Prosperity, http://www.peakprosperity.com/video/223/playlist/153/chapter-7-money-creation

 

3. DC Market Share

(follow link for current DC market share for Wells Fargo)

 

4. DC Government Deposits/Investments

(follow link for current DC government deposits with Wells Fargo)

 

5. Criminal Activity List

As of mid October 2012, one report shows Wells Fargo has 74 lawsuits alleging predatory lending and other criminal charges filed against them. Listed below are some of the cases:1

 Predatory Lending to Minorities

  • July 31, 2009, State of Illinois Attorney General filed suit against Wells Fargo for steering blacks and latinos into high cost sub-prime mortgage loans2 3

  • April 2012, the Department of Housing and Urban Development will investigate the National Fair Housing Alliance claims that Wells Fargo engages in racial discrimination practices, throughout the country including Washington DC4 5

  • July 2012, Wells Fargo settled with the Justice Department and paid $125 million to subprime mortgage borrowers and $50 million to seven areas for assistance, including Washington, DC6 7

Other Illicit Activities

  • August 2010, Wells Fargo was fined roughly 203 million dollars by a U.S. District Judge for overdraft practices designed to "gouge" consumers and "profiteer" at their expense, and for misleading consumers about how the bank processed transactions and assessed overdraft fees8 9

  • April 2012, a federal judge order Wells Fargo to pay $3.1 million in punitive damages over a single loan. The judge stated Wells Fargo preferred to rely rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods10

 

 

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