Wells Fargo Buys Back Auction Rate Securities

I have said this before and I will say it again, your experience with the refinance process or investing, has less to do with the actual company than it does with the guy that picks up the phone when you call. In every company there are always going to be some bad apples, just like there will always be some fantastic trustworthy people. How do you know the guy on the other end of the line is trustworthy or not? When you find the answer to that one, drop me a line will ya? I once had a car salesman talk me out of a sale saying it would be too much a burden on my family to pay for the new car. I took his advice, and subsequently have purchased five cars from him, and I will go nowhere else. There needs to be more guys like him in the financial services industry.

Wells Fargo is a big company and there are a lot of good people there. Heck, I used to be one of those good people. There are also a few bad apples, and those apples were selling Auction Rate Securities (ARS) as safe cash equivalents and people snapped them up. There is probably a good time and place for something like this, and investors should have been told of the risks and the liquidity, or lack thereof when they were considering buying them. Thousands of investors were told to purchase them with promises of great returns and liquidity.

When the bottom fell out of the 330 billion dollar ARS market investors found out just how illiquid those investments really were. Banks ran for the hills and there became no market for the debt instruments and investors were left with a completely illiquid security. Soon after that many accounts were frozen and smaller investors are still waiting to see if they are going to get their money back.

Wells Fargo has agreed to pay a 1.9 million dollar fine while not admitting any wrong doing. Better news though is that the banking giant will be buying back the ARS to the tune of 1.4 billion dollars. Now finally the duped investors are going to see some justice. They have been waiting since Feb. of last year when their accounts were frozen on the heels of the ARS crash.

Wells Fargo is one of more than a dozen financial firms that have agreed to buy back those risky securities at par. Let’s home more step up to the line and do the right thing.

Good luck and happy investing.