Wells Fargo’s Take on the Wisdom of Sen. Bernie Sanders

Without Our Consent: Bernie Sanders’ The Speech and Telling Conversations with Wells Fargo Employees
by Adam Perry for Boulder Weekly
5/26/2011

I don’t drive, but every time I bike or walk past a gas station I can’t help reflecting on the fact that the price Americans pay for one gallon of gas is literally more than Exxon Mobil pays in taxes. In fact, due to federal subsidies—as Jim Hightower reported in Boulder Weekly on May 12—Exxon, which made over $10 billion in profits during the first three months of 2011 alone, received a $156 million income tax rebate last year.

Vermont’s Bernie Sanders, the lone independent senator in America and author of the new book The Speech [Nation Books, $13], thinks it’s a crime to pass bills that ease tax rates for the most fortunate among us, especially when Congress doesn’t seem to be so much as proposing job-creation bills. Plus, the U.S. currently has the highest rate of child poverty in the industrialized world—we’re at 20 percent, Sanders notes, while the Netherlands is in second place at 9.8 percent—and more than 40,000 U.S. factories have closed in the past decade, so you’d think the focus would be on helping those in need.

“When we try to understand why we have a such a huge national debt [currently over $14 trillion] and a $1.3 trillion deficit, it is also important to understand that many large and profitable corporations avoid virtually all of their tax responsibility,” Sanders says in The Speech.

Famously, on December 10, 2010, Sanders stalled a vote on the deal President Obama had made with Republicans to extend tax cuts for the wealthiest 2% of Americans. One can see why the senator would be angry about Congress agreeing to extend these tax cuts: passed by President Bush in 2001, they helped a $230-billion-per-year budget surplus under President Clinton become the growing trillions-a-year deficit Bush left Obama.

For eight hours, Sanders, the longest-serving Independent in the history of the U.S. Congress, filibustered the extension of the tax cuts—which are taking place at a time when the richest 1% in our nation owns more wealth than the bottom 90%—by standing on the Senate floor and telling the sad truth about our country’s current fiscal situation. The Speech is the text of that historic filibuster, the live streaming video of which crashed the Senate television website because of the worldwide rush to watch it, and Exxon was one the targets the senator fired at the most.

“People say: ‘Oh my word, in order to deal with our deficit, we are going to have to cut back on Medicare and Medicaid and education. We cannot afford it,’” Sanders says. “I guess we can afford to allow Exxon Mobil, the most profitable corporation in the history of the world, to make huge sums of money and pay nothing in federal taxes. We can afford to do that, but we cannot afford to protect working families and the middle class.”

Alas, last week a vote on ending nonsensical tax breaks for oil companies, whose profits are at an all-time high, was blocked by the Senate (ending the tax breaks would reportedly have saved $21 billion over the next 10 years). Yes, at a time when the middle class is quickly disappearing while the rich get richer and, as Larry Summers (former Director of the White House National Economic Council) said in the New York Times last week, “One in five men between 25 and 54 is not working…it was one in 20 in the 1960s,” America is blatantly giving special treatment to those who need the least help.

On that point, Sanders saved his most heated rhetoric in The Speech for the architects and beneficiaries of the American tax-payer-funded bailout of financial institutions (everyone from Wells Fargo to, somehow, banks in Bahrain and Japan) back in 2008.

“What they did to the American people is so horrible,” Sanders says. “I will never forget [former Treasury Secretary] Hank Paulson coming before the Democratic caucus saying that within a few days he needed $700 billion or the entire world’s financial system would collapse. My suggestion to him at that meeting was: Why don’t you go to all your banker friends and millionaire and billionaire friends and get some of that money, and don’t go to the middle class of this country that has already been harmed?”

Even harsher words were saved for the financial institutions who are “lending out money to desperate Americans at 25 or 30 percent interest rates” while making record profits in part from the tax-payer funded 2008 government loans they took for less than 1%.

“That, my friends, is called usury,” Sanders (who calls the CEOs of these companies “gangsters”) adds, “and according to every religion on Earth, that is immoral.”

Perhaps our preferential treatment of the wealthy is why Jesus, who said it’s easier for a camel to pass through the eye of a needle than for a rich man to get into heaven, disappointed so many Americans by skipping the scheduled Rapture last weekend. In all serious, whether politicians who proudly identify themselves as Christians and then propose eliminating healthcare and other services for the elderly, sick and poor while calling a mere return to the tax rates under President Clinton “un-American” are hypocritical is a topic worthy of an entire book of its own. But what’s absolutely certain is that banks like Wells Fargo, which is omnipresent in Boulder, will not offer citizens whose taxes went to keep their business afloat a few years ago the same interest rate we gave them.

How do I know? I went in and asked.

First, a little back story: just after purchasing Wachovia Bank for $12.7 billion and reaping gigantic tax-code benefits estimated at $25 billion dollars, the bank (our nation’s second largest) was given $25 billion in direct funds from the federal government with the use of our tax dollars. Two weeks after the controversial $700 billion bailout of financial institutions was passed by Congress, Wells Fargo released a statement explaining that funds accumulated by issuing stock and “the capital investment from the government…will enable us to finance the Wachovia acquisition.”

Though eight of the biggest banks—including Wells Fargo—fully repaid their government loans by the summer of 2009, neither Congress nor the treasury department required the banks to divulge specifics on how the San Francisco-based bank used the bailout funds. And it will be years before we know how much the government earns in interest from these financial institutions or what happens with those profits. Still, I found it fascinating to walk into the Wells Fargo on 28th St. last week and ask for a loan with an interest rate of less than 1%.

The “personal banker” I spoke with initially seemed confused by my request.

“Less than 1%? To tell you the truth, I don’t know if Wells Fargo offers loans at less than 1%,” she told me. “The only form of credit where we offer an interest rate of less than 1% would be on a credit card, and it would probably be an introductory rate, not a rate you would have for the length of the account.”

“Would you consider a rate of less than 1% unfair?” I asked.

“I guess if it was a straight rule across the board then yes, because that’s the main tool that we use for making money.”

This was my chance.

“If the bank ended up in debt and needed a loan, and asked for it from the taxpayers, do you think they would get it at less than 1%?”

“It’s possible,” she replied.

When I asked why she thinks Wells Fargo enjoyed an interest rate of less than 1% from the government, the personal banker said, “I don’t think Wells Fargo needed the money. I think the reason that they took it was because Wells Fargo was purchasing Wachovia Bank, which was in trouble. I don’t know if I could say if it was right or wrong that it happened, but Wells Fargo is a strong company.”

I also casually asked a teller her opinion of the bailout on my way out of the bank.

“I don’t know. Was that recent, like this week?” she asked.

“No, a few years ago,” I said. “It was about $25 billion paid to Wells Fargo with taxpayer money during the financial crisis, without our consent.”

“Oh, the one we’ve already paid off? Eh, it’s business. I’m a business-standpoint person.”

“But if a person who owns a business wants a loan at less than 1%, they can’t get it from Wells Fargo,” I said.

“You can’t get a loan of 1% really anywhere.”

“Unless it comes from the tax payers.”

“Yeah, the money the government gave,” she shot back. “They did it for all the banks. We paid ours back. Everyone else still owes money”—untrue; see above—“and we don’t. I like that. It’s smart. The bank will still make money, because it’s a business. You do what you do.”

“The taxpayers, of course, pay the government,” the teller concluded, “but the government did the bailout. Taxpayers aren’t really involved.”

I agreed to disagree with her on that one, and then canceled my account with Wells Fargo in favor of opening one at a credit union (none of which needed a bailout, even though, unlike banks, their interest rates are virtually always legally capped at 15%) but clearly at least one taxpayer was involved in the financial crisis.

Wells Fargo CEO John Stumpf has benefited from the callous policies Bernie Sanders decries in The Speech. Due to the extension of the Bush-era tax cuts Sanders opposed, Stumpf will receive a $318,000 tax break this year.