Short notes on GS's return of Tarp Fund

Maybe it is not a question why GS is planning to return the Tarp fund to the Government. As many people pointed out, GS doesn't wanna mess with Ms. Pelosi, and guys there don't want their bonus to be capped in any form(No way, it is not something the masters of the universe can't ever take).

However, intuitively we might wanna ask another question, that is whether or not other guys will follow suit. If yes, who will and if not why not?

My guess is, they won't.  Among those who taking Tarp Fund, they are all banks except for GS and MS(Essentially they r still brokers though apparently bank holding co.), and we can be quite safe to rule out both MS's will and its ability to follow GS. 

So let's focus on the banks. Out of all those banks, it is understandable for guys in a bad shape like C and BOA to keep the fund on hands, if not asking for more; how about those  relatively healthier players like Big Jpm and Wells Forgo, as well as those mid size regional banks who did not need Tarp money at the first place.

The answer is still a "no", for reasons below:

Banks and brokers are both having a loan book and a trading book, albeit banks' loan books are much bigger but less complicated than brokers'. For the 1st half of the financial crisis, most of the write downs came from the security side, from their trading books; But now,  we are at a stage of real economy woe, with GDP contraction and higher unemployment, which resulted in much lower quality of loan books because of increasing NPL, given banks only had their worst case scenario of unemployment to be less than 9% but we are already there. Like Ms. Whitney said, banks have more catch up games to play, even though they had already done so much.  

So for GS, who had taken a few hits on the security side, more prudentially than its counterparts,  and also having a relatively more realistic mark for its toxic assets, plus its relatively better risk management/speculation track record(But yes, all relatively), it would have the luxury of not worrying about too much future loss incurred because of increasing NPL from further home owner disclosure as a result of unemployment, from students who fail to find a job to repay their loan, from consumers who are desperately withdrawing their credit card to maintain their daily life but only finding out most of their credit card lines had been cut...

In a word, given the nature of banks' business model, which focuses more on the loan business,  and their way too optimistic assumptions on the housing and unemployment situations, it will better them off to keep the Tarp fund in case needed, compared with Gs's less worry on its NPL, which enable them and push them from a reward/regulatory perspective to return their funds...