Wells Fargo and Co CEO Dick Kovacevich initially had reservations about banks dabbling in private equity investments. As a skeptic at the outset, he became a convert which lead him to lead the bank to big private equity investments during his tenure until his retirement as chairman of the board after making Wells Fargo the fourth largest bank in the US back in 2009.

This skepticism though has been shared by many US lawmakers and as a result, they had crafted what is popularly known as the 'Volcker Rule' in the Dodd-Frank financial reform bill of 2010. In that piece of legislation, the law limited the bank's ability to make big bets with their capital including private equity fund investments. This was borne out of taxpayer backlash should the investment falls through and the bank is left footing the bill.

Named for former Federal Reserve Chairman Paul Volcker, this rule still is being finalized as to its fine print. This has caused many banks to pull back but not Wells Fargo. Instead, the bank has been investing in buyouts and venture capital agreements on its own utilizing Wells Fargo funds and employee funds with them. This is what is known as 'merchant banking' a clear exemption under this Volcker rule.