via: Naked Capitalism/Yves Smith A Reason to Stop Banking with Wells Fargo Posted: 12 Mar 2011 10:45 PM PST Even though deciding which TBTF is the worst is like a having an ugly contest between Cinderella’s sisters, Wells Fargo may deserve pride of place. Yes, the Vampire Squid sorta owns the government. JP Morgan has too many people believing it didn’t need a bailout during the crisis. Ahem, what about a $76 trillion derivatives clearing operation don’t you understand? If AIG or Morgan Stanley had failed post Lehman, JPM would have been next. And it is the most aggressive bank I have come across in the “gotcha” fees and bait and switch as far as retail customers are concerned. But Wells is sanctimonious and too often has taken the position that it is less badly behaved than other banks, which grates on me. It has played fast and loose with its balance sheet reporting, and has lied to Congressional staffers, claiming it hadn’t engaged in robo signing when there were depositions in the public domain to the contrary. Hopefully, not many NC readers are having to think seriously about filing for bankruptcy. But the practice described in this post at the San Diego Bankruptcy Attorneys Blog reads as bad faith dealings (and if someone from Wells reading this might dare to disagree, we can have a conversation about the past and ongoing certifications, which are included in SEC filings, that your bank has made as trustee in numerous mortgage backed securities offerings): Wells Fargo has an interesting corporate policy, and by “interesting” I mean to say “bordering on the criminally fraudulent.” If you have a regular checking account at Wells Fargo, and file for bankruptcy, the bank will freeze your assets — even if you don’t owe them a dime. Think on that for a second….. You’ve never bounced a check in your life and have never borrowed money from Wells Fargo, not a credit card, not a mortgage, nothing. But you fall behind on your debts and…you decide your best option is to file for Chapter 7 and get a fresh start. You list a Wells Fargo checking account on Schedule B as an asset, as you’re required to do by federal law, and provide the address of the bank branch and account number. A week after filing, you go to the ATM but the machine eats your card. You go inside and ask the teller what’s going on, and he says “Sorry, your account’s been frozen.” You ask to speak to the manager, who looks at the same computer screen and also says it’s frozen. How do you get it unfrozen? How do you not default on your car and mortgage and power bill? According to Wells Fargo’s national policy, they will only release these funds if the bankruptcy trustee appointed in your case asks them to, or if they’re ordered to do so by the court. Which takes at least a month. My advice to every single one of my clients is to take that money out of Wells Fargo immediately and park it at another bank or credit union where you don’t have any loans or credit cards. Update 5:30 AM: Reader JoJo in comments confirms my suspicions. This story comes from ABC, “Bank confusion turns into $10,000 problem” PETALUMA, Calif. (KGO) — The common banking practice of making a deposit turned into a $10,000 nightmare for a Bay Area man and his daughter. Their money disappeared. Myron Hinrich of Petaluma helps support his daughter, Anne, while she studies film-making at USC. “She’s struggling in graduate school; she needed to make a rent payment,” Hinrich said. Anne was low on cash so Hinrich deposited a $10,000 check into Anne’s account at Wells Fargo Bank. However, what happened after that came as a complete shock. “They said the check was fraudulent, they canceled the account and they didn’t want to see her again,” Hinrich said. Wells Fargo refused to give Anne the $10,000. Instead, the bank abruptly closed her account and told her to go away. The only explanation? The bank claimed the check was a fraud. It gets worse. Wells refused to return the money to her father…. This story will have you believing the fed is doing it Addams Family style!

The Fed Beats Marie Antoinette With “Let Them Eat iPad2s” Posted: 12 Mar 2011 09:03 PM PST In fairness, I must point out that Marie Antoinette has gotten a bit of a bum rap. The infamous “let them eat cake” was actually “qu’ils mangent de la brioche” which is “let them eat brioche”. The only French queen who might have said that was Marie Therese, about 100 years before the French Revolution. In addition, Marie Antoinette was concerned with the welfare of the poor, so such a clueless remark seems even more unlikely to have come from her. However, there is no excuse for this telling example of how out of touch Fed officials are, specifically, New York Dudley of the New York Fed. From Reuters: Dudley faced persistent questions from the audience on food inflation. The president of the Federal Reserve Bank of New York said people forget that even as the price of food is rising, other prices are falling. He mentioned the price of the iPad 2, prompting guffaws from the audience. Now before you forgive this as standard economist thinking….the Wall Street Journal’s Economics blog makes clear Dudley was speaking to people in Queens: The central banker hit the iceberg when he was trying to defend his belief–one shared by many private-sector economists–that underlying inflation in the U.S. economy is low despite a worrisome surge in commodity prices which Dudley said the Fed would be “unwise” to overreact to. The grief Dudley got indicates the Fed is facing a growing gulf between how it and the public at large perceives inflation. If this disconnect widens, it could risk undoing the public’s confidence that the Fed will be able to keep price pressures at bay. Dudley’s day went south when he was pressed by several audience members about how he can view inflation as low when things such as grocery prices are marching higher. One participant asked “when was the last time, sir, you went grocery shopping?” The central banker told the audience “I certainly acknowledge food prices have gone up.” But he added some prices are lower and noted “Today you can buy an iPad 2 that costs the same as an iPad 1, that’s twice as powerful,” as an example of favorable price dynamics. His example was greeted with widespread grumbling in the audience, in a display of conspicuous discontent unusual for a Fed speaking event. The WSJ piece is still a bit of a fail, in that it attributes the gulf between the Fed and the great unwashed as being due to that food prices are “highly visible” and hence are in everyone’s face when they rise. Hello! What planet are these people from? Yes, the food and fuel prices are noisy, so the Fed focuses on so-called core inflation. But using only one metric is naive and in this case overlooks the fact that food and fuel loom large in the household expenditures of lower income people. And does Dudley not understand that eating, heating your house, and getting to work are non-discretionary activities, contrary to technology purchases like the iPad? Plenty of finance ministers and central bankers in emerging economics believe QE2 has played a significant role in stoking commodities inflation, including food prices. There is some evidence to support that view although the jury is very much out (perishable commodities, which cannot be hoarded and thus reflect fundamentals better than ones that are storable, as well as non-exchange traded commodities in India, such as cooking oil, do not show the same degree of price appreciation as exchange traded agricultural goods have). But there is a large cohort that would applaud if the idea that Bernanke had said, “Let them eat iPads” got traction.