The Treasury Department may not be so worried about Goldman Sachs’s (GS) potential bid to repay its bailout money after all.

A government source close to the process refuted earlier media reports alleging that Treasury was concerned Goldman’s plan to return $10 billion in taxpayer money "will harm the recovery effort."

Goldman reported earnings Monday evening and said it would raise $5 billion through a new stock offering with the intention of using that money to pay back funds received from the government’s Troubled Asset Relief Program. The stock offering was oversubscribed, but was priced at $123; shares had closed Monday at $130.15.

The source told FOX Business that the government will review applications by firms that apply to repay TARP funds on a case-by-case basis.

The source would not comment specifically on Goldman’s Monday announcement, but said that when a firm can raise private capital, “it’s a positive thing.”

He also said that when firms retain their TARP capital it’s “a positive thing” because it means they will have it to expand lending.

Treasury’s recent estimates of remaining TARP resources include an assumed repayment of $25 billion, though the time frame on the repayment isn’t specified, nor is a list of institutions that might repay the money.

Goldman received $10 billion from TARP last fall. So far six banks have repaid TARP money, but they are all smaller banks. Many banks are chafing under the program’s restrictions, particularly the limits on executive pay and bonuses.

Goldman took the $10 billion last fall after the government asked around 10 of the nation’s biggest financial institutions, including Citigroup (C), Bank of America (BAC) and JPMorgan Chase (JPM) all to take money. The premise was that some of them needed it and some didn’t, but that to avoid runs on banks and panic at the weaker institutions, all the banks would be lumped together.

Indeed, the concern about banks repaying TARP money is twofold. One, if stronger banks all repay the money, the weaker banks could face customer withdrawals, creditor demands and other situations that would exacerbate their problems. Two, banks might try to repay the funds earlier than they are really able, and may end up weakening themselves simply to get out of the program.

President Obama said in remarks Tuesday that “ideally,” banks’ needs for capital “will be met by private investors.” He added that “where this is not possible, and banks require substantial additional resources from the government, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.”