Wells Fargo, which resisted the $25 billion investment under the government’s Troubled Asset Relief Program (TARP) last year, has announced that it has not applied to repay it. Earlier, the bank was asked by regulators to undergo stress tests to see if it could endure a deep recession and ordered it to build a $13.7 billion capital buffer.
Recently, JPMorgan Chase, Goldman Sachs, and Morgan Stanley won Treasury approval to buy back approximately $68 billion of government shares. Richard Kovacevich, Chairman of Wells Fargo, had condemned the government for retroactively imposing new restrictions on lenders receiving federal bailout funding. However, Wells Fargo is keeping it while integrating Wachovia and working to raise capital.
Julia Tunis Bernard, Spokeswoman of Wells Fargo, said: “We want to pay back the government’s investment on behalf of the US taxpayer at the earliest practical date. We will work closely with our regulators to determine the appropriate time to repay the TARP funds while maintaining strong capital levels. Wells Fargo has been de-risking Wachovia’s balance sheet and has used the TARP money to continue lending to credit-worthy customers, more than nine times the amount of the government’s investment.”
Anthony Polini, Analyst at Raymond James & Associates, said: “Given the level of TARP and given their reluctance to cooperate with regulators as readily as some other companies, Wells could be in the penalty box for a couple of quarters.”
