Three months ago, how quickly a bank could pay back TARP money wasn't an issue on many people's minds. Instead we were worrying about how much more taxpayer capital they might need.

Fast-forward to a spectacular stock rebound, an inkling of an economic bottoming process, the completion of the bank stress test, and a barrage of pitchfork-wielding taxpayers and retroactive-taxing politicians, and banks are trying to rid themselves of TARP money faster than they can scream "socialism."

Goldman Sachs (NYSE:GS) and JPMorgan Chase (NYSE:JPM) have been crafting plans to repay the funds in full for a while. Now several (relatively) smaller banks are raising capital in hopes of ditching the burden that comes with calling the stars and stripes your designated savior.

In the past few days, major banks have been selling stock in droves. Have a look:


Announced Stock Issuance

Current Market Cap

Capital One (NYSE:COF)

$1.55 billion

$11 billion


$1.5 billion

$14 billion

US Bancorp (NYSE:USB)

$2.5 billion

$34 billion

All three banks say they plan on using the proceeds to repay TARP. None of the three were required to boost capital levels after the stress test results became public late last week.

Additionally, Wells Fargo (NYSE:WFC) and Morgan Stanley (NYSE:MS) raised a combined $12.6 billion worth of common stock last week. Both are being forced to raise capital in accordance with the stress test, yet both have expressed sincere interest in paying taxpayers back ASAP.

So what's this mean for your investments? Some good, some bad. Of course, no one's complaining that banks have gained enough confidence from the investment community to raise private capital -- a task that would have been virtually unthinkable just weeks ago.

Yet here's another way to look at it: If banks are eager and willing to sell stock, should you be equally enthused about buying that stock?

Think about it, and the question almost answers itself. When insiders are willing to sell high, outsiders typically aren't buying low. Issuing capital that represents a significant portion of a company's market cap is a big deal with severe long-term consequences. Regardless of the penalties that come with holding TARP funds, this isn't the kind of thing any sober CEO would be willing to do unless they could get it done at a price high enough to be ultimately advantageous for the company. Prices that are high enough to benefit the company typically do not equal prices low enough to qualify as bargain investments.

When companies -- especially those that aren't being forced to boost capital -- flood the public market in an attempt to raise money while investment sentiment is high, it's usually not because they're trying to make new shareholders rich. Anyone who bought most dot-com IPOs knows precisely what I'm talking about.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.