Wells Fargo (NYSE: WFC) announced on Tuesday that it has developed plans to repay the funds it received under the Troubled Asset Relief Program (TARP) without diluting its existing shareholders.
In October of 2008, the federal government invested more than $100 billion in the nine of the United States’ largest banks through the Troubled Asset Relief Program which was administered by then Treasury Secretary, Henry Paulson. Wells Fargo received more than $25 billion of those funds.
Now that the economy is starting to revitalize, banks are eager to pay off the loans from the TARP program to improve their public image, demonstrate their financial viability and to lessen their oversight by the Treasury Department.
Although many banks have repaid their TARP loans this year, Wells Fargo has not yet paid their loan back. Recent stress tests conducted in May suggested that Wells Fargo may need up to $14 billion in new capital, more than any other bank that received bailout funds. Berkshire Hathaway (NYSE: BRK.A) Chairman and the largest shareholder in Wells Fargo, Warren Buffet, criticized the stress tests arguing that Wells Fargo and other institutions have no need for additional capital.
A spokeswoman for Wells Fargo announced on Tuesday that Wells Fargo will repay the funds borrowed through the TARP program soon. Wells Fargo stated that its generating new capital internally through earnings, and will be able to pay the government back without needing to raise any new equity capital and diluting its existing investors.
