Wells Fargo & Co. didn’t want a federal capital infusion last fall but got one anyway. Now, despite its earlier objections, the bank isn’t rushing to pay the money back.
Wells confirmed Tuesday that it wasn’t among the 10 megabanks that have applied to repay the capital the Treasury injected under the Troubled Asset Relief Program.
The San Francisco bank cited a need to concentrate on digesting loss-ridden Wachovia Corp., which Wells bought late last year.
“We want to pay back the government’s investment on behalf of the U.S. taxpayer at the earliest practical date, but we haven’t applied yet to our regulators to repay the investment,” Wells said in a statement. “Our priority right now is to integrate Wachovia into Wells Fargo as smoothly and efficiently as possible to benefit our 70 million customers.”
Earlier this year, a frequent rumor in the banking industry was that Wells was prepared to write a check at any moment to repay its $25-billion TARP infusion and escape bailout-related government restrictions on executive pay, dividends and other things.
The anti-TARP sentiment was stoked by Wells Chairman Richard Kovacevich, who opposed his bank’s inclusion in the program from the start. He has said Wells took the money only because it was “forced” to by then-Treasury Secretary Henry M. Paulson, who wanted all of the nation’s largest banks to participate so none appeared to be singled out for federal intervention.
In March, the fiery Kovacevich also assailed the government’s plan for “stress tests” of 19 major banks to determine whether they had enough capital to survive a worse-than-expected economy over the next two years.
“We do stress tests all the time on all of our portfolios,” Kovacevich said in a March 13 speech at Stanford University, according to Bloomberg News. “We share those stress tests with our regulators. It is absolutely asinine that somebody would announce we’re going to do stress tests for banks and we’ll give you the answer in 12 weeks.”
As it turned out, the stress tests ended with the Federal Reserve pronouncing May 7 that Wells and nine other major banks were short of capital. Wells was ordered to increase its capital by $13.7 billion by November. The bank quickly raised $8.6 billion in a stock sale May 8.
Because Wells hasn’t yet closed the capital gap as determined by the Fed, an application by the bank to repay the TARP money could very well have been rejected.
As for Wells’ timing, the bank said it would “work closely with our regulators to determine the appropriate time to repay the TARP funds while maintaining strong capital levels.”
Wells’ shares rose 27 cents to $25.66 on Tuesday.