Government Won't Allow Wells Fargo to Repay TARP
Wells came through the credit crunch as strongly as any large institution. Yet the company must feel as if it’s been singled out to appear in some banking-industry version of The Twilight Zone. Its nightmare began, recall, in October of last year when Dick Kovacevich was summoned to Washington (along with heads of nine other big banks) and told that Wells would take $25 billion in TARP money, whether it wanted it or not. Which, as Kovacevich pointed out at the time, it did not.
No matter! Down Wells’s throat the $25 billion went anyway.
Keep in mind that despite huge reserve building, Wells Fargo remains profitable. It's Tier 1 capital ratio is 10.6% (6.0% is considered "well capitalized") and its results have shown that the government's "stress tests" from last year are far off the mark.
Unfortunately for the U.S. economy, Wells Fargo is one of the largest and most successful lenders in the country (and one of the handful still financing new transactions). The government is actively preventingit from lending more.
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