Bank of America was allowed to repay its $45 billion in federal aid and raised $19.29 billion by selling stock in order to do so. Citi and Wells argue that they should be entitled to similar terms, however the government has pulled back on the reins asking that Citigroup raise $20 billion in common stock to exit TARP, while Wells was told it needed billions as well, says the Journal.
With less than a $100-billion stock-market value, this raises larger and deeper shareholder issues for Citi. Meanwhile, Wells Fargo's displeasure is tempered by its benefit from the TARP funds, which helped mitigate the debt incurred by a hefty Wachovia Corp. takeover. This is a case in point,according to the Journal, the Fed is leery of a rapid payback, specifically holding an underlying concern that a series of losses could result in these banks having a dearth of capital available.
To read the entire Journal article, click here.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.
