Wells Fargo says "Ooooooops!"

In July I wrote about my confusion regarding Wells Fargo raising their dividend. It just didn't seem right to me.

Wells Fargo raises dividend...hmmmm

I now know why it rubbed me the wrong way. They are fing idiots.

Yesterday Wells Fargo (WFC) raised $2 billion in a bond offering. The cost of the capital? 9.75%. When the top rate it can lend at is 6% the only way it can make money on this capital is to lever it.... increase the risk.

It stunk to me at the time they did it and it's rotten now...what in the world is a company doing raising their dividend when 2 months later they have to go to the bond market at 9.75%.

It's beyond comprehension what these financial companies think they are doing. It doesn't take a rocket scientist to know that you need to preserve your capital in this market. These companies will not survive if they keep trying to put lipstick on the pig. Eventually they will have to write down losses and the longer they wait, the more expensive and difficult it will become for them to access capital.

Raising their dividend was a complete sham and it will end up backfiring (already has it seems).