Government buys a stake in Wells Fargo to be patriotic
Minnesota's second largest employer will get a little help from their friends in the government. The feds released their plan to take stakes in nine large financial institutions, including $20 billion in Wells Fargo.
Government officials say the move is symbolic and meant to trick Americans into believing their money is safe. Ah yes, that makes so much sense! Force Americans to invest in banks through their taxes and debt so they are confident enough to get into more debt with their local bank. Right.
According to the Wall Street Journal:
In one of the most dramatic actions taken by regulators to address the financial crisis, officials plan to funnel up to $250 billion from the $700 billion financial rescue package into potentially thousands of banks through the new, voluntary program.
The government is set to buy preferred equity stakes in Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. -- including the soon-to-be acquired Merrill Lynch -- Citigroup Inc., Wells Fargo & Co., Bank of New York Mellon and State Street Corp.
And according to the Washington Post, Americans should suddenly gain the utmost confidence in the economy after hearing the news:
In its most sweeping gesture, yet, the government compelled the chief executives of nine major banks to sell taxpayers an ownership stake in their companies. The investment is heavily symbolic. It is meant to assure the world that the American financial system is open for business. It is also intensely practical. It is intended to encourage many of the nation's 8,500 smaller banks to ask for the money they need, but cannot get anywhere else, to rebuild their reserves and increase their lending to people and businesses.
We were a little nervous about getting our 10th credit card, but credit us up! This is great.