Monday, February 9, 2009

I Stand Corrected. But I Was Also Right.

After I wrote my previous entry concerning the employee junkets being handed out by Wells Fargo, I received two responses from complete strangers. One was from someone who used a newly-created, presumably fake name. But the other was from some who identifies himself as Chad S. Trease. Mr. Trease identifies himself as a mortgage planner in Kansas City who is affiliated with Wells Fargo. Here are his comments in full:

If you're unemployed, then you no doubt have ample time to do some research. Wells Fargo tried to refuse the TARP funds, but they were forced to take them. They are the only recipient to make a dividend payment (371 million). Try doing some due diligence next time before you continue to crucify a company made made a profit of 3 billion dollars last year. What they spend their own money on is none of your business.

As a news professional, I hate making mistakes, but I did make one. Almost everything Mr. Trease says is essentially correct. Wells Fargo did not ask for a bailout. It was apparently foisted upon the bank by then-Treasury Secretary Henry Paulson. Thank you, Mr. Trease for pointing that out, and please accept my regrets for not checking into this further before I blogged.

Having said all of that - I stand by everything I said concerning how Wells Fargo has handled its PR nightmare concerning its employee junkets to Las Vegas. Whether Mr. Trease (or Wells Fargo) likes it or not, the bank DOES have 25 billion dollars of government money, and as a taxpayer, that DOES make it my business.

So here is my take. Wells Fargo has just handled this whole affair terribly from a public relations standpoint. Whether it used profit money or TARP money to pay for those trips is irrelevant. After seeing how the public reacted to the lavish parties hosted by other TARP recipients, Wells Fargo should have reconsidered holding its own trips this year. At the very least, it should have been on the PR offensive early on - explaining the trips before anyone had the opportunity to blindly criticize them.

Worst of all, after feeling the heat from the media, rather than going away quietly, the CEO of the company issues a full-page ad calling "media stories" criticisizing the trips "nonsense". The problem is - even if Wells Fargo is in the right... even if "the media" is wrong... the bank has already lost the PR battle.

Most of the people slamming Wells Fargo this morning are not members of the media. They are bloggers. They are people who have already made up their minds, and are now publishing their opinions. The "truth" - or Wells Fargo's version of it - has not reached the public, and the bank would have been better served trying to sell that instead of buying an inflammatory ad that only throws gasoline on the fire.

Being a TARP recipient and sending employees on junkets to Vegas during what is shaping up to be a severe recession is in poor taste. It's tacky. And yes, it's bad public relations.

What should Wells Fargo do now? Shut its trap, for one. Continue to pay back dividends to the government. Exercise restraint.

And get through these austere times like the rest of us.


Julie Matthews said...

Being a TARP recipient and sending employees on junkets to Vegas during what is shaping up to be a severe recession is also exceptionally bad business. Would you do business with Wells Fargo after this? I would not.

TARP has been an abject disaster because the banks live in some alternate universe where absolute greed is absolutely fine. And they are absolutely wrong.

larryhol said...

It's possible to set aside the TARP issues you address and still see the public relations failure of the Las Vegas event and the Stumpf letter. Given the widespread negative public reactions to executive excesses, Pres. Obama's remarks and a sheaf of newspaper articles about this, it's reasonable to ask what Wells Fargo thought they could accomplish by publishing such a letter. It remains in my mind an unnecessary public relations debacle.

John Matthews said...