You've probably heard by now: Wells Fargo (NYSE: WFC ) abruptly canceled an employee gathering in Las Vegas earlier this week after various media outlets and politicians stomped their feet in objection.
And why not? Wells Fargo is the recipient of $25 billion in TARP funds provided by taxpayers last fall. Amid the furious (and justified) criticism flung at AIG (NYSE: AIG ) and Citigroup (NYSE: C ) for basking in the luxury of weekend junkets and private jets, it should have known better.
No one disagrees: Every bank should be exercising restraint these days, if only because we're flirting with an economy rivaling the Great Depression. Factor in that most banks -- including Wells Fargo -- are padding their books with taxpayer money, and just discussing the possibility of lavish corporate spending seems absurd.
Still, a few of us here at the Fool can play devil's advocate. For one, Wells Fargo isn't even remotely close to the white-flag-in-the-air, four-horsemen-have-arrived kind of mess banks such as Citigroup and Bank of America (NYSE: BAC ) are in. In fact, when the TARP funds were doled out last October, Wells Fargo made it clear that it (a) didn't need the money, (b) didn't want the money, and (c) found the entire bailout absurd to begin with. Nonetheless, the TARP funds were forced down its throat by then Treasury boss Hank Paulson. As my Foolish colleague Chuck Saletta put it, this was Paulson's offer no bank could refuse -- Godfather comparisons intended.
I'm not trying to defend Wells Fargo’s attempted Vegas excursion. Whether it wanted taxpayer money doesn't override the fact that it had taxpayer money. Even so, there's a point to be drawn from a Wells press release that states:
Since credit began contracting 18 months ago, Wells Fargo has made almost half a trillion dollars in new loan commitments and mortgage originations. Last quarter alone, we made $22 billion in loan commitments and $50 billion in mortgage originations. That's more than $70 billion or almost three times the amount of the U.S. Treasury's investment in Wells Fargo -- which has begun to benefit from our performance through the dividend we will pay to the Treasury this quarter.
The bottom line is that, yes, it was in bad taste for Wells to plan a lavish recognition party while the economy was sinking into a dark abyss, but lumping every bank into the government-sucking fail pile is hardly fair. If there's one big bank that deserves to keep its corporate independence, it's Wells Fargo.