gets it exactly right in a recent blog post about why Wells Fargo (WFC) is the latest big bank out of the TARP.
It’s not that they’re a zombie, or that they have some secret stash of Wachovia-branded hand-grenades ready to go off at any time.
It’s that they don’t need to give it back. They don’t have pay restrictions, like Bank of America (BAC) and Citigroup (C), and they don’t have legions of high-paid traders and financiers whose jobs are under permanent scrutiny and for whom market wages look bad.
TARP is uber-cheap capital. All the banks would have loved to keep it if there were no strings attached and, to an extent, for Wells there aren’t.
So rather than dilute its shareholder — most notably Warren Buffett — why not just hold onto the cash?