DC Public Banking

1. Bailout Amounts and Placement on the FSB List of Too-Big-To-Fail Banks

Wells Fargo received $25 billion in bailout funds¹ in the 2008-09 financial crisis.

Wells Fargo is listed by the Financial Stability Board as a systematically important financial institution². The Financial Stability Board is an international body that monitors³ the global financial system and is made up of members from the G20 nations.⁴

• In November 2012, the Financial Stability Board listed Wells Fargo as one of 28 banks whose failure could cause serious systemic financial/economic problems.⁵

• Wells Fargo's placement on the list is in the third tier used for 2012, which indicates that it is among the 14 most critical financial institutions in the global economy. Banks in this category are required by the FSB to have a level of capitalization that is quite low, at 1.5%.

• FDIC Vice Chairman Thomas Hoenig, testifying before the House Financial Services Committee on June 26, 2013, said the biggest Wall Street banks are “woefully undercapitalized,” while calling the industry underpinnings a “very vulnerable financial system.”

2. Derivatives Holdings

• Wells Fargo holds $3.928 trillion (notional value) in derivatives, and appears in position 6 of 25 top banks holding derivatives.⁶ During Chapter 11 bankruptcy in the U.S., derivatives counterparties receive "super-priority" status above all other creditors, including depositors. This means that derivatives counterparties will get all of the bank's assets before any other creditors, including depositors, are paid.⁷

• Due to the contagion effect⁸ of our fractional reserve banking system and Wells Fargo's investments in derivatives, deposits held with Wells Fargo may be vulnerable. Wells Fargo's failure could have a significant impact on our economy in Washington, DC. As noted below Wells Fargo holds a significant share of deposits for the government of DC.