Abstract
Particularly in the United States, the link between politics and banking has always been strong and notably with lobbies so that the US government was used to helping the banking system when crisis hit the country but was also used to withdrawing during auspicious periods. These are partly the reasons why Wells Fargo weathered the World Wars or knew the government's support in 1999 with the Gramm-Leach-Bliley Act.
Nevertheless, there is a current example too, which shows how far the government is able to go to help the US banking system to prevent it from collapsing: on October 28, 2008, Wells Fargo and Company was the recipient of $25 B of the Emergency Economic Stabilization Act Federal Bail-out in the form of a preferred stock purchase.
This factor remains crucial since it is a determining factor to the good health of the banking system.
Indeed, the turnover of banks is partly made thanks to households and companies, so that during crisis times, customers get more into debt and have trouble to pay off. On the contrary, when the conjuncture is good people decide to invest.
That is the reason why the Great Depression of 1929 was a black period for the banking system since most of the competition was wiped out. However, WF succeeded in getting out while the going is good and eventually weathered the Depression.
