The Wells Fargo (NYSE:WFC) continues to be a somewhat strange one, as the conflicting signals from the company over the months leaves you wondering what the real strength of the bank is.

One obvious example is their response to receiving of TARP funds, which they have claimed through CEO John Stumpf in the past that they had never wanted the money, had never needed the money and had been forced to take it by the government. Of course they continue to communicate publicly that they want to pay it back as soon as possible.

The problem is they’re vacillating on paying the money back, saying it would dilute shareholder value if they sold shares of common stock to do it.

So where did the money go if they didn’t need it and never wanted it? Why didn’t they just sit on it and pay it back when the smoke cleared … like now? The answer to those questions seem to be that they did need it, and so now are trying to figure out how to pay it back with little risk to their shareholders, while keeping the appearance that they continue to be strong.

This leads to the question put forth in the title of the article on whether Wells Fargo is actually weaker than they are letting on.

The bailout of Wells Fargo was practically done through the government being issued $25 billion in preferred shares in the company, which are what needs to be acquired again by the bank to pay back the money.

Why isn’t Wells Fargo buying back the preferred shares? I think it’s fairly obvious: they can’t afford to do it. This is where we come to them selling common shares to do it, which they are resisting doing for the reasons stated on diluting the value of the current shares of stockholders.

But for the sake of on the strength of weakness of Wells Fargo, that’s somewhat irrelevant, as it shows they don’t have the capital to pay it back, and so in fact did need it.

The argument of Wells Fargo would be they didn’t need to issue preferred stock to the government because they could have raised the capital by selling common stock. If that’s the case, why didn’t they just do it then? Dilution of the value of shares in the stock seems to be the answer from Wells Fargo, but how would they have continued operating if they hadn’t done that?

My reason for asking that is Wells Fargo says now that their capital levels aren’t where they need to be in order to pay back the TARP money. But whether it was through issuing preferred stock from the government, selling common shares, or meeting the required capital levels for the bank, it seems to say to me they were weak all along, but have been resisting admitting it even though they supposedly didn’t want the TARP money.

This isn’t to say there hasn’t been money raised through common stock offerings, as there has been, to the tune of about $8.6 billion.

There’s a lot more to this story, but the more you follow it the more tortured and difficult it is to understand and put together, as it is with all the banks that received TARP money.

Just taking into account Wells Fargo saying it didn’t want or need the TARP money, and then saying they aren’t able to pay it back, says they used it for something. And if they used it for something, they must have needed it. If not, as I mentioned earlier, it would have been easy to pay back and get it off their books.

This alone tells me there’s more problems with Wells Fargo than they’re letting on, and we’ll see how plays out going forward.