Days After Wells Fargo Admits Defrauding The Government, NY Fed Rewards It With Primary Dealer Status

Tyler Durden's picture

Back on April 9 we described the latest example of how criminal Wall Street behavior leads to zero prison time and just more slaps on the wrist, when Warren Buffett's favorite bank, Wells Fargo, admitted to "deceiving" the U.S. government into insuring thousands of risky mortgages.  According to the settlement, Wells Fargo "admits, acknowledges, and accepts responsibility" for having from 2001 to 2008 falsely certified that many of its home loans qualified for Federal Housing Administration insurance.

In short: it admitted that is deceived and defrauded the government.

Its "punishment" - a $1.2 billion settlement of a U.S. Department of Justice lawsuit, the highest ever levied in a housing-related matter.

And now, having suffered so much trauma which led to precisely nobody going to prison, less than two weeks later it's time for Wells to get its reward: as Bloomberg reported earlier, the "bond market’s most exclusive clubs got a new member" when the NY Fed granted the criminal Wells Fargo Primary Dealer status. 

The brokerage arm of Wells Fargo & Co., the third-biggest U.S. bank by assets, was designated a U.S. primary dealer by the Federal Reserve Bank of New York on Monday. It’s the first addition to the list since February 2014, when the U.S.-based brokerage of Toronto-Dominion Bank was included. The roster of primary dealers has grown to 23 firms from as low as 17 in 2008, although it remains below its 1988 peak of 46.

"A long process of working with the Fed has come to a conclusion," Elise Wilkinson, a spokeswoman for San Francisco-based Wells Fargo, said by phone. "The scope and scale of what we’ve been doing, it’s been at the level of a primary dealer for a long time.” The process took years, Wilkinson said, declining to elaborate.

We dread to ask just what that is.

Others were quick to jump on board and congratulate Wells: "Inclusion of a well-capitalized, well-rated firm onto the primary dealer list can only be a positive for the Treasury market,” Kevin McPartland, head of research for market structure and technology at financial-services consulting firm Greenwich Associates, said in an e-mail.

Of course, the only reason why Wells was granted PD status is because as Bloomberg reminds us, Wells Fargo has been expanding its lineup of bond-trading businesses as its competitors shrink. The bank has plans to start trading single-name credit default swaps, people with knowledge of the matter said last month.

And what better way to get an implicit stamp of approval than by saying it is a Fed primary dealer, a position which also grants its direct Treasury auction access.

Primary dealers are required to make “reasonably competitive” bids for a pro-rata share of every U.S. debt auction, according to the New York Fed. Last year, a total $2.1 trillion of Treasury bills, notes and bonds were issued, according to Sifma. The firms also trade with the Fed as it implements monetary policy, and provide market commentary for the New York Fed’s trading desk.

Wells Fargo is moving up the ranks in investment banking and being a primary dealer in Treasury instruments signifies their rising importance in finance,” Bill Smead, chief executive officer at Seattle-based Smead Capital Management, which holds Wells Fargo shares and manages about $2.4 billion, said by e-mail.

“This is important when other sources of revenue are scarce and will be one more way higher interest rates would be helpful to overall profits,” he said.

Sure is, and now if only Wells can pull a Goldman and "Lehman" one of its key competitors, its revenue potential will be unmatched by almost any other bank.

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I am a Man I am Forty's picture

They deserve it as much as those other pricks.

Never One Roach's picture

"Change you can beleive in!"


~ Hussein Soweto O'Bama

OrangeJews's picture
OrangeJews (not verified) Never One Roach Apr 18, 2016 9:45 PM

It's just good recruiting.

VWAndy's picture

 Wells those are they cats that lost all the deeds? Hmmm.

Flying Wombat's picture

It's a big club, and most are not in it.  On a related note re. DB and last week's news:

GATA Vindicated *BUT* Deutsche Bank A Limited Hangout – Bill Murphy

HRH of Aquitaine's picture
HRH of Aquitaine (not verified) Apr 18, 2016 8:13 PM

Obviously We will Fuck you very much Bank has not changed at all. That is why they are in the club, now.

medium giraffe's picture

USD getting slapped about this evening.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Apr 18, 2016 8:15 PM

No surprise, isn't this one of Buffett's favorites?

Paul Kersey's picture

It should be Buffett's favorite, because, through Berkshire Hathaway, he owns or controls $23,423,959,504 worth of Wells Fargo stock.

i_call_you_my_base's picture

The Fed is very tough on their owners.

ebworthen's picture

Of course!  Who runs the non-Federal privately owned "reserve" bank?

The banks do!!!  That is why Walls Fargone gets a pass!!!

Hang the money-changers!

Excursionist's picture

But, but, but.. the Fed is independent of the U.S. government.  So what's the rub?

Flying Wombat's picture

Did ZeroHedge ever run John Titus' latest? It's amazing.

Tylers, you're welcome to use my screen captures and the TND version; Titus gave me permission.  


Bankers Above the Law; The Veneer of Justice in a Kingdom of Crime – John Titus, “Best Evidence”

chunga's picture

I think Tyler put it on ZH on behalf of Krieger if I remember right. It's a crying shame there's only 65K views, it should be 65 million.

Straight shot to the documentary by John Titus who's ZH handle is "Cheyenne".

Cabreado's picture

Until a thoroughly corrupt, defunct and whoreiffic Congress is repopulated with a critical mass of interested patriots, the trajectory remains the same.

Change the focus, change the chatter, redirect attention from pissing in the wind to a finite set of 535...

Oh, and, they can shut the Fed down, too.

foxmuldar's picture

Got to keep Buffett happy. He's a close friend of Obama's.

Aubiekong's picture

They are one and the same.  Just take the blue pill and go to work each day...

malek's picture

As it's a basic requirement for achieving that status.

Paul Kersey's picture

Wells Farago, JPMorgan, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and the Federal Bank of New York are all partners in crime. There victims are the American people. One only has to read the list of the FRBNY's Primary Dealers to understand where the power is concentrated:

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
Societe Generale, New York Branch
TD Securities (USA) LLC
UBS Securities LLC.
Wells Fargo Securities, LLC

GRDguy's picture

So if this was the mafia, then Wells Fargo just made Capo.  Wonder who's the Underboss, and Boss. It's probably not a public name.

Big Stapler's picture
Big Stapler (not verified) Apr 18, 2016 9:53 PM

There is a the anti-American Obama administration for you.

Anyway, Warren Buffett gave Obama a lot of money. It wasn't a bribe of course (depends what the meaning of "is" is), but of course Buffett expected a little something in return

Westcoastliberal's picture

Wake me up when the CEO gets indicted.

If you'd like to see that, vote for Bernie Sanders, recently endorsed by Bill Black.

Big Stapler's picture
Big Stapler (not verified) Westcoastliberal Apr 18, 2016 10:38 PM

If you want to support Bernie Sanders, move to Venezeula and enjoy the fruits of world class socialism.

Or you could try acting like an adult (or a kindergarten graduate) and remember that there is no such thing as free

If Wall Street stops stealing from us, and Washington DC steals twice as much instead -- how does that help the middle class?

Bernie is a con man, just like Hugo Chavez and Obama.

After all the "free shit" Chavez gave Venezeula, now they can't afford toilet paper.

HYMN's picture

Need anymore proof these bastards are all in cahoots?

JailBanksters's picture


Now they can create as much fraud as they like with Impunity.


Arnold's picture

Need to move treasuries to prep for the Sequel to QE III.

the.ghost.of.22wmr's picture
the.ghost.of.22wmr (not verified) Apr 19, 2016 6:18 AM

This is right up there with Saudi Arabia heading the human rights commission and Red China receiving preferred trading partner status.

O Tay Panky's picture

..and I have an interview with this bank this week.....

mary mary's picture

I hope Wells Fargo immediately buys $750-billion worth of US Bonds to replace those HouseOfSaads sells.  Wait!  They don't buy the bonds, do they?  They sell them to pension funds, and then say, "See?  Americans can't manage their own pension funds, so they need Obama to let us privatize them".

mary mary's picture

The scum always rises to the top.