Should Wells Fargo tap the equity markets?

December 10, 2009 | By Jim Kim

Wells Fargo (WFC) has been adamant that it will repay its TARP obligation in a shareholder-friendly way. Which seems to be a disparaging nod toward the dilution other banks, like Bank of America (BAC) and Citi (C), have forced on their shareholders.

But TheStreet.com wonders if a bit of dilution right now might not be such a bad idea. The markets are hot, Wells Fargo's stock is holding up, so why not raise some capital to pay off its $25 billion burden. The market just might kick the stock up another notch. The fact is that other banks have been able to raise bundles. Bank of America has raised $33 billion this year. Shareholders seem to value the cutting of TARP ties more than dilution. It could be the way for Wells Fargo is to earn more capital. But that will take at least a year and require massive dividends along the way. Will Wells Fargo change it's tune?

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