Dec 9, 2008

Richard Kovacevich (Wells Fargo's CEO) on deleveraging

For those of us who are born capitalists, you know, it's an extraordinary time. However, what's happening is a deleveraging of the financial system. By putting in capital instead of just buying loans, for every dollar you put in, institutions get to lever that 10 to 20 times in terms of the loans they can make. So I think it's very wise to attempt to neutralize to some extent the deleveraging that has gone on and will continue to go on by putting capital in that can then be levered.

~ Richard Kovacevich, CEO, Wells Fargo, "Wells Fargo's Kovacevich: The Importance of Hitting Bottom," BusinessWeek, October 22, 2008 (Nov. 3 issue), interview with Maria Bartiromo

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