Big Day For Wells Fargo

February 9, 2009

Lots of readers today and many from Wells Fargo too. Did they surf our site on their own time, or bill American taxpayers to read about their egregious New York Times ad campaign?  Whoever I discussed the ad with equally asked the same question: why didn’t Wells Fargo’s CEO John Stumpf just sent an email or Twitter his staff to let them know just how much he values his “team.”

Wells Fargo Cancels Lavish Wynn Hotel Event

February 3, 2009

During the past few weeks, we have tempered our discussions of the failing bank, along with MasterCard and Visa’s roll in devastating the global economy.  One issue we are not reading, amidst the record job losses and banking mismanagement is why the credit card giants aren’t lowering their anticompetitive merchant interchange fees?

At our company, we are reaping strong returns, due to our innovative new photo imaging business model at We reinvented our business, while Visa and MasterCard simply charged more for supporting and antiquated pricing model as its technology leaped ahead of what was once an analog payment network. 

Their actions help fuel our amplified commitment for calling attention to Visa and MasterCard’s unfair merchant interchange rates and its member banks continued monopoly of  charging nearly $60 billion in antiquated annual interchange fees when you use a credit and debit card.

Other businesses are struggling to survive, but we are more determined than ever to win this litigation.  Many member banks have failed and some CEO’s have been dismissed.  However, their allegedly illegal price-fixing and ruinous financial burden on merchants and consumers continues.

Today, we learn that Well Fargo, a named defendant in the multi billion dollar merchant interchange litigation has decided that The Wynn Hotel in Las Vegas is not the place to host their upcoming event for their home lending unit.  The same for Citigroup (another named defendant) for trying to spend $50 million of taxpayer dollars on a corporate jet. 

As millions of jobs are lost and our economy rests on the brink of collapse, the least MasterCard and Visa can provide is immediate relief from their anticompetitive and illegally-based price-fixing scheme.  If Denny’s can give away free breakfasts after the Super Bowl, think of the marketing grist that MasterCard and Visa would gain from saving retailers and consumers billions of dollars.

“A Quiet Windfall For U.S. Banks” (via Washington Post)

November 10, 2008

Excerpt, by Amit R. Paley, Washington Post Staff Writer, Monday, November 10, 2008; A01. Click here to read more


The financial world was fixated on Capitol Hill as Congress battled over the Bush administration’s request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company’s losses to offset their gains and avoid paying taxes.

Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes.

Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes

The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.

The Jones Day law firm said the tax change, which some analysts soon dubbed “the Wells Fargo Ruling,” could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment for this article.

Sen. Charles E. Grassley (R-Iowa), ranking member on the Finance Committee, was particularly outraged and had his staff push for an explanation from the Bush administration, according to congressional aides.

[source: Washington Post, Nov 10]

Why Visa, MasterCard and its Member Banks Are Accused of Illegal Price-Fixing by Agreement

November 21, 2007

We found this very simple defination of price-fixing on the Wikipedia site [click here for more info].

Price fixing is an agreement between business competitors to sell the same product or service at the same price. In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers. Price-fixing can also involve any agreement to fix, peg, discount or stabilize prices. The principal feature is any agreement on price, whether express or implied. For the buyer, meanwhile, the practice results in a phenomenon similar to price gouging.

Methods of price fixing will include selling at a common target price; setting a common “minimum” price; buying the product from a supplier at a specified “maximum” price; adhering to a price book or list price; engagement in cooperative price advertising; standardizing financial credit terms offered to purchasers; using uniform trade-in allowances; limiting discounts; discontinuing a free service or fixing the price of one component of an overall service; adhering uniformly to previously-announced prices and terms of sale; establishing uniform costs and markups; imposing mandatory surcharges; purposefully reducing output or sales; or purposefully sharing or “pooling” markets, territories, or customers.

Generally, price fixing is illegal, but it may nevertheless be tolerated or even sanctioned by some governments at various times, particularly among those whose countries are developing economies. See also Collusion.

In neo-classical economics, price fixing is inefficient: the anti-competitive agreement by producers to fix prices above the market price transfers some of the consumer surplus to those producers and also results in a deadweight loss.

In the United States, price fixing can be prosecuted as a criminal felony offense under section 1 of the Sherman Antitrust Act. [1] In Canada, it is an indictable criminal offence under section 45 of the Competition Act. Bid rigging is considered a form of price fixing and is illegal in both the United States (s.1 Sherman Act) and Canada (s.47 Competition Act). In the United States, agreements to fix, raise, lower, stabilize, or otherwise set a price are illegal per se.[2] It does not matter if the price agreed upon is reasonable or for a good or altruistic cause; or if the agreement is explicit and formal or unspoken and tacit. In the United States, price-fixing also includes agreements to hold prices the same, discount prices (even if based on financial need or income), set credit terms, agree on a price schedule or scale, adopt a common formula to figure prices, banning price advertising, or agreeing to adhere to prices that one announces. [3] Although price fixing usually means sellers agreeing on price, it can also include agreements among buyers to fix the price at which they will buy products.

Under American law, exchanging prices among competitors can also violate the antitrust laws. This includes exchanging prices with either the intent to fix prices or if the exchange affects the prices individual competitors set. Proof that competitors have shared prices can be used as part of the evidence of an illegal price fixing agreement. [4] Experts generally advise that competitors avoid even the appearance of agreeing on price. [5]

Under U.S. law, price fixing is only illegal if it is intentional and comes about via communication or agreement between firms or individuals. It is not illegal for a firm to copy the price movements of a de facto market leader called price leadership, which has been seen to be the case in markets for breakfast cereals and cigarettes. But informal agreements or unspoken agreements to fix price also can violate the antitrust laws. The price-fixing laws apply to industries and professionals, for-profit concerns and non-profits and charities. [6] The United States Department of Justice Antitrust Division and United States Federal Trade Commission are responsible for enforcing federal price fixing laws; see also Sherman Antitrust Act. The Department of Justice handles both criminal and civil cases. As of 2004 under US law corporations may be fined up to $100 million for criminal price fixing; individuals can be charged and sentenced to prison sentences of up to 10 years for price-fixing violations. The Federal Trade Commission can prosecute firms for price fixing as a civil matter. Many State Attorneys General also bring antitrust cases and have antitrust offices, such as Virginia, New York, and California. Private individuals or organizations can bring their own lawsuits for triple damages for antitrust violations and also recover attorneys fees.

[Source: Via Wikipedia]