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WELLS FARGO CHAIRMAN RICHARD "DICK" KOVACEVICH EXPLAINS "WHAT THE HELL HAPPENED"
Stanford Institute for Economic Policy Research, Economic Summit, March 2009
KEY QUOTES:
04:35 Financial institutions themselves caused the problem
04:49 This problem was caused by a total disregard by financial institutions' management of basic risk management of fundamentals, even common sense, coupled with a serious lapse in ethical behavior. It was fueled by greed, unchecked by regulatory authorities and reached an unprecedented scale due to the breakdown in previously reliable third party safety valves, namely rating agencies.
07:17 Yes, we bankers often cut our own throats
09:42 For most Americans, their 401K's now look more like 201K's
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Wells Fargo Chairman Dick Kovacevich said the governments plans to stress-test the nations major banks and then publicly release the results weeks later is an asinine way to try to boost public confidence in the big banks.
We do stress tests all the time on all of our portfolios, Kovacevich said in a speech at the Stanford Institute for Economic Policy Researchs economic summit on March 13. We share those stress tests with our regulators. It is absolutely asinine that somebody would announce we're going to do stress tests for banks and well give you the answer in 12 weeks.
Kovacevich also expanded on earlier news reports that indicated he had initially resisted taking $25 billion in a federal direct-investment under the Troubled Asset Relief Program. He said he opposed the programs structure requiring Wells and other major banks to take the money, saying that regulators hoped requiring all banks to take the money would lift public perception on the troubled banks to the level of the nations healthiest banks. Kovacevich feared the reputation of the nations strongest banks would sink.
All banks became tarnished, with Citigroup requiring three rounds of bailout money and Bank of America (NYSE: BAC) making the case that its not another Citigroup. (NYSE: C)
Kovacevich said that requiring Wells to take the TARP money shut the bank out of the private capital markets. As a result, the bank had to slash its dividend to build up capital as part of its efforts to eventually repay the TARP investment.
Kovacevich said the banking industrys woes are the direct responsibility of bank managements.
This is about bank management. Its not about boards, auditors and regulators, Kovacevich said. Were responsible for making our companies safe and sound.
The San Francisco banker appeared exasperated at one point in which an audience member asked whether uninsured deposits were safe at Wells (NYSE: WFC).
It is safe, he said, adding that Wells operates in a conservative fashion so that depositors would put their money in the bank even without the assurances provided by FDIC insurance.
Kovacevich, unlike many of his rivals in recent weeks, was vocal in his criticism of the TARP program.
Is this America, where you do what the government asks you to do and then retroactively youre told to do more? he asked to applause from his audience.
Kovacevich said hes optimistic about the future, especially with central bankers and government leaders willing to do whatever it takes to mend the economy.
But hes concerned that all this money pouring into the system might have unintended consequences down the road.
Kovacevich insisted that the nation is nowhere near falling into the next Great Depression. And for those who are still pessimistic, Kovacevich said he has just three words for them to ponder, Whatever it takes.
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@JohnStumpfWF burn in hell
pojeta 4 months ago
wells fargo bank is worse than terrorists
artillero130 1 year ago
They backtracked because the information in my video is becoming more well known and any company that does business like the fictitious company in my vid will soon be caught. They will pay the fine and continue though lol
WhistleBlowa1 1 year ago
Wells fargo sucks - join a local credit union and tell 'em to go to hell!!!!
hiscraft 2 years ago
Dick is not good
dbadassboy 2 years ago
Good Video. I used to work for the bank. I actually got to meet you guys in Disneyworld in 2001. I wish you the best with everything right now. Everyone should have to work at a bank to see how tough a job it is.
58ad79 2 years ago
Lookin' good Dick! Thanks for the promotion! ;)
JohnStumpfWF 2 years ago