This short work week has produced several stories in the banking industry all of which point us in a positive direction.

First up news that four banks who had initially drawn on TARP funds to address liquidity issues have successfully petitioned the federal government to pay back those loans earlier than expected.  In an article by DSnews.com Carrie Bay writes, The American Bankers Association has steadily lobbied lawmakers to allow banks to settle their government debts quickly, arguing that it would send a positive message to depositors and investors that the nation’s banks were healthy.  The announcements last week from these first four banks that they have paid back their TARP loans in full signal that all three major regulators — the Federal Reserve, the Office of the Comptroller of the Currency, and the FDIC — are open to granting early repayment waivers to institutions.

Next, Wells Fargo posted earnings on Thursday giving analysts a $3 Billion surprise.  International markets responded vigorously to the news which also sent the Dow Jones Industrial Average up nearly 250 points.  Overall stocks surged to their highest levels in two months after the news.  According to Wells the earnings bonus was due to an increase in mortgage applications and other benefits relating to the acquisition of Wachovia completed back in January 2009.

And finally consumers are finally seeing the federal TARP program in action, as Bank of America announced they have successfully completed the first loan modifications under the Making Home Affordable Program.  In a first wave of refinancing, Bank of America said it will first serve homeowners whose mortgages are serviced by BofA or Countrywide, and those who do not have mortgage insurance on their current loans.

Overall, profitable banks which can repay the emergency loans issued under the federal bailout program will work wonders on consumer confidence, a driving force in the economy.  Further, implementing the bailout plans on “Main Street” should give consumers the shot in the arm helping avoid foreclosure.  This in turn should ultimately have a positive effect on the nation’s ailing housing market.