Wells Fargo To Pay Back TARP Funds

  Wells Fargo joined the other large banks in announcing plans to pay back our TARP money. Banks are complaining that they can’t attract top talent with their compensation structures capped.

  TARP: Troubled Asset Relief Program – maybe that is one acronym that we can forget. Wells Fargo may avoid the label of being the biggest bank still holding bailout money when it announced that it plans to pay back its $25 billion in government loans. For those keeping track at home, yesterday they followed Citigroup, and Bank of America last week, in making that announcement. Wells will raise $10.4 billion from the markets, another $1.5 billion by selling certain assets next year, with approval from the Federal Reserve, and another $1.35 billion by issuing stock to employee retirement plans and giving stock awards instead of cash to “certain Wells Fargo team members.” Wells, and the other banks, expects this to help 2010 earnings but that it will hurt fourth-quarter financial results, reducing income available to common shareholders.

  Count your blessing that you don’t work for some company like Optimal Blue or Del Mar Data Trac. Not that they are bad companies by any stretch of the imagination, but the underwriting and program changes are fast and furious – it is difficult to keep up! Smaller companies continue to outsource this task. And, unless I am missing something, there is little in the way of loosening or good news. As a partial list, recently SunTrust suspended their Agency Plus Permanent product lines, Bank of America updated their Conforming Fixed DU Version 8.0 products and discontinued their Conforming 5-yr balloon, Conforming 7-yr balloon, Expanded Approval Level II, and Expanded Approval Level III product lines, Franklin American tweaked products (their Bulletin 2009-40), Flagstar has discontinued their Fannie Mae HomeStyle Renovation product line. SunTrust updated their Conforming & Key Loan Products product lines, and of course Fannie Mae updated their Conforming Temporary High Balance product lines and began using DU 8.0 products and guidelines. Citi has suspended their Flex with 18% MI product lines.

Whew!

Stay Tuned….

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