Bailout "party watch" catches Wells Fargo bank
Filed under: Banks, Ripoffs and Scams
Several banks are getting their fair share of negative publicity for engaging in questionable spending after accepting bailout money (compliments of the taxpayers). The bailout money was theoretically meant to help financial institutions stay in business and to help loosen up tight credit markets. But time and again, we're seeing the banks doing "business as usual" in spite of the welfare dollars they've received.First it was AIG being caught throwing not one, but two fancy resort events. There were the Merrill Lynch bonuses paid out even after dismal financial results and the need for taxpayer funds. This week we heard about Citibank paying $400 million to get the naming rights for the New York Mets stadium.
The latest bank caught spending questionably is Wells Fargo. The bank got $25 billion of taxpayer funds, and is celebrating with a 12 night bash at the Wynn Las Vegas and Encore Las Vegas. This high-end event is being hosted for the top mortgage officers, and Wells Fargo says it's a tradition to spend big on its best producers. The insurance division of Wells Fargo is holding a party of their own at Mandalay Bay in February.
There are, of course, excuses for this spending. In the past we've heard that the divisions throwing parties are not the same ones that technically received bailout funds. We've also heard that incentive programs for employees in sales positions are an industry norm and are required if a company expects to keep its best producers. No matter what excuse is offered up, it's a little hard to swallow a vacation at a swanky resort when the average Joe is essentially financing it with bailout funds.
There's something that doesn't sit right with me when corporate welfare is needed but expensive parties and retreats are being thrown. Either Wells Fargo (and all the other financial institutions guilty of similar behavior) needs taxpayer money or they don't. And if they need taxpayer money, they better trim everything down to the bone and be good stewards of the gift we the taxpayers have given them.
UPDATE: Wells Fargo announced this evening that the Vegas vacation is being canceled. Yes, it's the right thing to do. But make no mistake that they wouldn't have made that move if the vacation hadn't been exposed in the media.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
Reader Comments (Page 1 of 2)
2-04-2009 @ 12:27AM
MommaMitra said...
I wish they would use some of that money to let me keep my house. I've been unemployed since 12/2007 and have my initial and equity loan with Wells Fargo. Now they've bought out Wachovia who was my lender for a car I co-signed on and the car holder had it repossessed. My only other long term debt is a credit card, which so far is current in payments but so close to being charged out. I need a bailout.
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2-04-2009 @ 2:12AM
Dan said...
It's a shame that because something is written and published in the press, people assume it's true. Tracy's article represents the worst of US journalism. There is not one statement of fact or anything close to fact. It is intentionally misleading and done purely for her own publicity and gain without any regard to truth.
Unfortunately, as the truth is revealed, it will get back page publicity at best. The business and recognition conference is for an event planned over a year ago for top performing mortgage employees of Wells Fargo, not a 'junket' for 12 days for executives. Not one penny of the $25B in TARP funds are for this event, which was paid for long before TARP was even conceived. Further, Wells Fargo was forced to take TARP funds in exchange for equity share in the company and its own Chairman lobbied Congress to exclude Wells Fargo from TARP. By no means were these "welfare" dollars and by no means are they used to fund a year ago planned business conference and recognition event for three (not 12) days in Las Vegas at the Wynn.
It is sad that Wells Fargo caved into the political pressure that this deceitful article generated. Most of the costs for this event have already long been spent so canceling it will not save Wells Fargo any money, only cause morale issues internally and give the wrong impression. I only wish they had enough fortitude and strength to expose irresponsible journalists like Tracy and stand by their own convictions.
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2-10-2009 @ 6:17PM
Gaylord Reagan said...
Given this weekend's full page ad in the Washington Post over John Stumpf's name (President and Chief Executive Officer of Wells Fargo), in which he aggressively defends "team members across America who are most deserving of recognition and our gratitude", I'd have to say that he is a poster child for greed and a culture of entitlement. Unbelievable.
2-13-2009 @ 12:44PM
Scot said...
Dan,
You're a good loyal employee. I'm sure Wells Fargo and their greedy CEO's are very pleased with your performance.
3-18-2009 @ 9:07PM
Maggie 13 said...
Who are you kidding..you must be one of Wells Fargo's employee aka lacky .. or perhaps you live on another planet...
I would believe the young lady before I would buy into your comment...
11-06-2009 @ 10:47PM
Julie said...
You are so full of crap Dan, do you work for Wells Fargo?
2-04-2009 @ 7:22AM
Walt said...
The TARP money to Wells Fargo was a loan not a gift. They are expected to pay it back with interest. How about the employees at the Wynn? Without corporate events, they too will be out of work by this summer.
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2-04-2009 @ 9:58AM
Debby said...
It does not matter if this was planned earlier or not. The banks cried for help and got it so buckle down like the rest of us, curtail frivolous spending and get down to basics. Do you think the government will just keep bailing the banks out with reports like Citibank's naming rights? I do not think so and if the government caves again, perhaps the American public will start holding their elected politicians responsible for a change
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2-04-2009 @ 3:11PM
Derek said...
Before everyone jumps on the “greedy bank” bandwagon, compare some quick facts: 1. AIG lost $37.831 billion for just the 1st 3 quarters in 2008 (4th Q comes out March 4th and is expected to be -0.45/share) 2. Citigroup lost $23.474 billion in 2008 3. Wells Fargo made (not lost) $2.842 billion in 2008. WFC also paid out $1.33 per share in dividends for 2008. Not to mention that the WF CEO was the only one that “pounded his fist on the table in frustration” and said that “bank didn't need or want government help” when Paulson “made nine of the nation's top banking executives an offer they couldn't refuse last week, telling them that the federal government wanted to buy stakes in their companies” (Wall Street Journal, 10/22/08).
Should WF have cancelled the top producer’s and manager’s mortgage conference in Vegas? Heck no! The reason WF made money when everyone else is going down the tubes is because of those people. What ever happened to rewarding those that performed above expectations? I know a person that is no longer going to the Vegas Conference and he is no executive. He worked hard, managed fairly and successfully, and does not make a salary above $50,000. Get the facts straight and stop lumping all banks together.
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2-05-2009 @ 2:44PM
Brad said...
I've got a 6.75% mortgage with Wells Fargo. I called three weeks ago asking to refinance. They said they couldn't do it. I've called again and now they won't return my phone calls. They got $25 billion of our money and won't pass it down. They need it for their party in Vegas. SCREW THEM !!!! Write your Senator and Congressman
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2-05-2009 @ 7:17PM
Joe said...
Agree with Dan. These are incentive trips for high producers. They work all year to be worthy of the trip from a production standpoint. Of course this is not new in this industry, Congress , who irresponsibily dish out money with very few limitations are also the ones at fault. Noone in congress made a comment about the avg employee who works hard and gets rewarded with an incentive trip.. Certainly admirable of Wells to offer, Not fall under not wasteful spending.
Morally wrong for Wells to pull the plug on this trip wom by hard workers. These are hard working producers, not top executives..
If congress and the public feel they have a right to medle in a company employee benefit, then they should have stipulated that with the inital bailout money..
Before the bailout was strong armed to Wells, these commitments were already promised to the employees and paid for.
Shame on the legislatures...
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3-18-2009 @ 9:06PM
Maggie 13 said...
well...that's the price they pay for making a deal with the........I guess your another WFB lacky
2-05-2009 @ 7:44PM
crabby said...
I think it is great that the trip was canceled.BFD so a few of their "top" performers forfeit a huge freebie...get the f*** over it and get with the program like the rest of this country!
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2-06-2009 @ 9:33PM
nellie said...
talk to someone who works at wells fargo you will find out the real truth
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2-09-2009 @ 4:22PM
sharon said...
Wells Fargo calls and harasses my sometimes 15 calls before the day
has ended. for a car that they know has been broken down for 2 years!
And when I remind them that the car broken, their only response is,
"Huh, yeh, right, when are you going to send us the money!
This people's representative sat in front of the senate of days, weeping.
crying and pleading for them to give them america's tax payers money
with no reason why they got into the situation!
Yet, when they call me, and I weep,cry and plead to have mercy on me!
The Wells Fargo personnel are cold indifferent and cold!
So, tell me what is that Wells Fargo employees can tell me?
2-07-2009 @ 12:15AM
Julie said...
All those slamming Wells Fargo for scheduling this recognition event in Vegas--Wells Fargo was the only bank who didn't WANT or NEED the bailout money. It was forced on Wells Fargo--the CEO's were not allowed to leave the room until they signed the document agreeing to accept TARP funds.
If you worked for a company who had provided recognition events for its employees for years before the bailout was ever a factor and all of a sudden those events were cancelled, wouldn't your morale drop. This is happening because of idiotic people in the media and public who have no clue what they're talking about when it comes to a situation--do some investigating before jumping on the "media" band wagon.
To show you how ridiculous this has gotten--Wells Fargo has cancelled local holiday parties for employees because of how the "media" has mis-represented Wells Fargo with the recognition events. It's pretty sad, especially when you have banks like Citi taking 2nd handouts from the government, but jacking up interest rates on credit cards from 8.40 % to 14.99% after the 2nd handouts were received. You tell me if Citi is using their TARP money to increase lending and spending among consumers.
MommaMitra--I'm sorry you've been unemployed since 12/07, but it is not Wells Fargo's fault that you may be behind on your mortgage. All of us need a bailout, but it needs to be taken up with Congress--they are the ones who want to spend $248 million for furniture for the Homeland Security building, millions of dollars for "Federal" employees to drive hybrid vehicles, millions of dollars in tax cuts for film makers to purchase film.
Wells Fargo isn't the problem--the government and the banks who made the mistake of getting into subprime lending are the problem.
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2-09-2009 @ 3:18PM
Sharon said...
No, it's not Wells Fargo fault that I am 32 days behind on my car payment. But, it is Wells Fargo and ALL American businesses
that sell the american customer, like indentured slaves! When
my son lost his job 1 day after co-signing on that car with me
and we turned right around and took the car back to Ford &
told Wells Fargo of our situation. They forced us to keep the
car. And when within weeks the car started to act up, then
the warrantee they sold us, just conveniently did not cover
anything that happened to be wrong with this car! And when
I called FORD and WELLS FARGO to further imform them of
my horrible situation, How did they reply?
"NO ONE FORCED YOU TO SIGN THE CONTRACT". Both
company's knowing full well that I tried to return the car a
day after my son lost his job, and both of the refusing to take
the car only after 48 hours! So, YES, some did FORCE me
to! And yes, it is WELLS FARGO'S fault that my son and I
am behind! This car has been broken down now for
2 YEARS! And my son has to take the bus to work and doesn't
make enough money there to take other buses to drive around
georgia to look for other jobs!
HOW DARE they call me 15, 16 times a day screaming at me
about being 32 days behind!
YEH, IT IS THERE FAULT!
2-09-2009 @ 2:00PM
Sharon said...
I got trapped in a 2002 mercury mountaineer and within a day my
son who is the co signer lost his job I drove the car back to the
dealer to return it. The dealer said that they would try to work
things out with WELLS FARGO. In the end neither the dealer
nor WELLS FARGO nor the dealer Gwinette Place Ford kept
their word. And six month later the car broke down and as
been broken down for 2 years. When I called Ford and
Wells Fargo and asked them to help me because the car they
sold me was a piece of junk! For two years I have heard nothing
but, TOO BAD, NO BODY FORCED YOU TO BUY THE CAR!
right now I am 32 days behind on car payments, and
Wells Fargo has been calling me for as many as 15 times
a day, everyday demanding money for a car that they know
has been broken down for these two years. They asked
for billion in BANK LOANS,never explaining how they got in
the situation they are in? Yet, just today I had 5
Well Fargo bill collectors call and threaten me, and it was
only 1pm. How DARE THEY harass me! I am at least trying
to make payments on a car that I have not been in nor have
driven in two years! I asked for mercy and they just screamed
and demanded that I give it to them even sooner!
WHERE IS MY BAIL OUT? SOMEONE HELP ME!
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2-10-2009 @ 3:13PM
Pjb said...
Dan said...
It's a shame that because something is written and published in the press, people assume it's true. Tracy's article represents the worst of US journalism. There is not one statement of fact or anything close to fact. It is intentionally misleading and done purely for her own publicity and gain without any regard to truth.
Well Dan, Derek, Joe, and Julie...I know where bankers without their big bucks are spending time...posting pro-bank junk on WalletPop. Go tell your sad stories on the mountains of upstate NY. If you can't spend your time working at being part of the solution to the problem you bankers created with your greed. May God forgive all of you.
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2-10-2009 @ 3:22PM
Pjb said...
If the top producers were really top producing would these banks be in such serious trouble? Delusions apparently are not limited to the CEO's of these banks. Dan, Derek, Joe, Julie need to see your ethics doctor?
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