Bank of America Will Repay $45 Billion to U.S. Bailout Fund

Dec. 2 (Bloomberg) -- Bank of America Corp., the biggest U.S. lender, will repay all of its $45 billion of government bailout funds, a step toward freeing the company from added scrutiny by regulators.

The lender plans to repay the Troubled Asset Relief Program using $26.2 billion of “excess liquidity” and $18.8 billion through securities sales, according to a statement today from the Charlotte, North Carolina-based company. The bank also plans to raise $4 billion through asset sales, and will issue $1.7 billion of restricted stock instead of year-end bonuses to some employees.

Bank of America received two rounds of TARP funds, including $20 billion to help cushion losses tied to the takeover of Merrill Lynch & Co. in January. Repaying bailout funds would help free the bank from curbs on executive pay, as well as unwanted input from regulators about the bank, people familiar with the matter have said.

The Federal Reserve this month asked Bank of America and eight lenders that received TARP to submit repayment plans.

Bank of America’s plan will reduce income available to common shareholders in the fourth quarter by $4.1 billion, the company said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=atkiuTj5qmwc&pos=1

Will reduce income available to common shareholders...You should short this stock into oblivion...

 

How else can they pay themselves the bonuses. Gotta love this.

 

I read this different :

federal budget situation in the US must be more than "desperate"...letting BoFA paying back TARP right now is ridiculous.

 

Yeah,way to go BoA! Now they will only screw the shareholders and not the taxpayers.

I agree..short this thing into oblivion. Thats what they get for making me wait in those long lines.

 

Basically, the collapse of Dubai World would lead to something the Fed is going to do anything it can to prevent. And since it already believes the “unprecedented liquidity” it pumped into the market last fall worked, it’s surely going to keep on doing what it does best – print money over any problem.

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Not to mention if the Dubai World crumbles, CITI holds a lot in Dubia but the Ripple Effect on Commerical RE in the US, which all Multi National Banks here have exposure to, , Well lets just say if you know how to read between the lines, it will make the Housing Crash look like kids play.

Hopefully, Arab Oil will come to the rescue, which will probably be the case for Dubai World. However, the risk of not restructuring the debt or defaults runs huge a huge risk to the Financial Sector.

Something to have on your radar.

 

only until the next time they get in trouble and then it will be the taxpayers back at risk again.

 

Dilution for shareholders will be “substantial,” said William Fitzpatrick,


an analyst at Racine, Wisconsin-based Optique Capital Management, which oversees $1 billion, including Bank of America shares. “It looks like this was done for the incoming chief executive,” he said. “You take out the compensation restrictions and everything else that went along with the government ownership.”


Dip buying opportunity for hedge fund Paulson, what ?

 

It's funny how about two months ago BOA would never be able to pay the TARP because of the amount of money and the regulators saying no. Now that they need a new CEO and with the the FED insuring that they make money they have the money to pay it back and the green light. Wake up people BOA has the highest amount of loans on their balance sheet compared to any other bank. It makes no sense in just a few months to face bankruptcy and to be able to pay all that money back and have it not effect your capital ratios. If I was the regulators I would tell BOA that you can pay the money back but if you do you lose govt guarantee which enables them to get cheap financing and see what they say then.

 

Stock up 5% pre-market.

 

I don't get it. Why does the stock go up when the shareholders are going to be left holding the bag?