Friday, December 4, 2009
Why Wells Fargo hasn't paid back the US Government
Posted by: Christina Dove
Being one of the first US banks to fail a little over a year ago when the financial crisis hit, Wells Fargo has yet to pay back any of the TARP funds that it has received from the government. Many other banks such as the Bank of America have also received funds and have been paying monthly installments back the government for the large loan that the government lended them.
There are two large banks that have failed and received substantial funds that they have yet to pay back. One of those debtors is Citi, the troubled New York lender with $45 billion in borrowings and billions more in federal asset guarantees. It is widely viewed as dysfunctional and overextended, and isn't expected to repay its TARP borrowings any time soon. The other faulty borrower is Wells Fargo. Like Bank of America, Wells would likely need to negotiate the terms of any TARP repayment with Treasury. The government naturally wants its money back -- but it also wants to make sure banks have enough capital to avoid another meltdown should the recovery take a detour.
In a more recent article, Wells Fargo Bank reports it will pay back the federal government $371.5 million in its first quarterly bailout installment. The government will be happy that Wells Fargo has taken the initiative to start paying back some of the borrowed funds.