Why Wells Fargo isn’t paying back TARP

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Fortune’s Colin Barr has an interesting story (it’s almost a week old but I just discovered it via Jim Kim) about why Wells Fargo still hasn’t paid back the $25 billion it borrowed (under duress) from us taxpayers last year, even as Bank of America has and Citigroup hopes to. His main explanation is that, unlike BofA and Citi, Wells isn’t willing to raise any more money via secondary offerings that would dilute existing shareholders. With Warren Buffett as one of those existing shareholders, that’s not surprising.

That sounds about right, but I think there’s another factor at work here that Barr fails to mention. It’s that Wells, unlike BofA and Citi, doesn’t employ legions of investment bankers and traders who expect to be paid millions of dollars a year. It’s a financial institution that caters to consumers and small-to-medium-sized-businesses, not a creature of Wall Street. So Kenneth Feinberg’s pay restrictions aren’t nearly as big a problem for it as they are for the companies with significant Wall Street operations. (See the update below for why Feinberg’s pay restrictions really aren’t a problem for Wells.) And so Wells Fargo can take its time and concentrate on what’s best for its shareholders rather than scrambling to escape government restrictions that only appear restrictive to the inhabitants of a few neighborhoods in Manhattan and southwestern Connecticut.

I’m tempted to launch here into a rant about this being yet more evidence of how disconnected Wall Street and its pay practices are from the rest of the economy. But why bother?

Update: My colleague Stephen Gandel points out that, um, Wells Fargo—unlike BofA and Citi—is not one of the seven companies receiving “exceptional financial assistance” for which Feinberg has outlined detailed pay restrictions. So Feinberg’s pay limits aren’t a problem for it at all. Which sort of supports my point, but also makes me look kinda silly. (What? It’s endangered species?!? Never mind.)

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