One who intends to leave others better off for his having existed.

12/26/13

Today I am serving signed subpoenas to Wells Fargo's auditing firm KPMG and the Securities and Exchange Commission (SEC)

I am asking KPMG and the SEC to provide public documentation detailing Wachovia and Wells Fargo's disclosure of Federal Reserve provided Term Auction Facility (TAF) loans in 2008 and 2009, and the actual details of said loans which other banks publicly reported.
.
.
On Page 231 of a July 2011, Government Accountability Office Report to Congressional Addressees GAO-11-696 states Wells Fargo & Co. borrowed a total of $159 billion while Wachovia Corporation borrowed a total of $142 billion via the Federal Reserve's Term Auction Facility. 

http://www.gao.gov/new.items/d11696.pdf
.
.
As Bloomberg News and Rolling Stone's Matt Taibbi reported, many companies did not publicly disclose the loans to the detriment of Wachovia's shareholders and those, including myself, who were managing Wells Fargo client fiduciary accounts governed under the Investment Advisors Act of 1940.
.
.
Zions Bank reported their Term Auction Facility loans in their fiscal year ended December 31, 2008 10k, which I didn't find in Wells Fargo or Wachovia’s filings, which they never disclosed to me after I raised the issue, or anyone else that I know of;

"In December 2007, the Federal Reserve Board announced a new program, the Term Auction Facility (“TAF”), to make 28 day loans to banks in the United States and to foreign banks through foreign central banks. These loans are made using an auction process. Zions Bank is currently participating in the TAF and may continue to do so as long as money can be borrowed at an attractive rate. The amount that can be borrowed is based upon the amount of collateral that has been pledged to the Federal Reserve Bank. At December 31, 2008, $1.8 billion in borrowings were outstanding under this program as compared to $450 million at December 31, 2007. However, by February 13, 2009, the TAF borrowings outstanding had been reduced to $500 million. At December 31, 2008, the amount available for additional Federal Reserve borrowings was approximately $4.3 billion, which had increased to $5.7 billion by February 13, 2009. An additional $1.3 billion could be borrowed at December 31, 2008 upon the pledging of additional available collateral. At December 31, 2008, the Company’s subsidiary banks had a total of $13.1 billion of immediately available, unused borrowing capacity at the Fed and various FHLBs, which had increased to $14.3 billion as of February 13, 2009."

http://www.sec.gov/Archives/edgar/data/109380/000119312509040927/d10k.htm
.
.
If this information would have been disclosed by Wachovia at the time, the chances of the stock tanking and the merger with Wells Fargo may very well have never taken place.

The backstory;

http://hartzman.blogspot.com/2013/02/sec-and-finra-whistleblower-evidence.html
.
.
On December 23, 2013, the Federal Reserve "invited public comment on proposed amendments to Regulation A (Extensions of Credit by Federal Reserve Banks) to implement section 1101 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1101 amended the Federal Reserve's emergency lending authority in section 13(3) of the Federal Reserve Act.

As required under the Dodd-Frank Act, the proposed rule is designed to ensure that any emergency lending program or facility is for the purpose of providing liquidity to the financial system, and not to aid an individual failing financial company.

The proposed rule has been developed in consultation with the Treasury Department."

http://www.federalreserve.gov/newsevents/press/bcreg/20131223a.htm
.
.
Part of the proposed rule states; "In order to ensure the disclosure in a timely manner ... concerning the borrowers and counterparties participating in emergency credit facilities, discount window lending programs, and open market operations authorized or conducted by the Board or a Federal reserve bank, the Board of Governors shall disclose, as provided in paragraph (2)—

(A) the names and identifying details of each borrower, participant, or counterparty in any credit facility or covered transaction;

(B) the amount borrowed by or transferred by or to a specific borrower, participant, or counterparty in any credit facility or covered transaction;

(C) the interest rate or discount paid by each borrower, participant, or counterparty in any credit facility or covered transaction; and

(D) information identifying the types and amounts of collateral pledged or assets transferred in connection with participation in any credit facility or covered transaction."
.
.
I have found this to be evidence that the Federal Reserve chose not to report who got how much under what conditions, which Dodd-Frank forced to the Fed to change.
.
.
As Matt Taibbi reported, financial institutions are required to disclose any government assistance per SEC rule;

"Many financial institutions, such as thrifts and banks, are receiving financial assistance in connection with federally assisted acquisitions or restructurings...  If these or any other types of federal financial assistance have materially affected, or are reasonably likely to have a material future effect upon, financial condition or results of operations, the [Management Discussion and Analysis] should provide disclosure of the nature, amounts, and effects of such assistance..."

http://www.sec.gov/rules/interp/33-6835.htm
.
.
Wells Fargo and Wachovia amongst others were supposed to do what Zions bank did, but didn't, and the SEC, the Fed and our elected leadership let executives profit from what most didn't know and got away with it.

No comments: