Bank of America has been cleared by the U.S. government to repay the $45 billion in TARP funds it received last year at the height of the banking crisis, and BofA may be preparing to do so before 2009 comes to a close. That said, it’s not a foregone conclusion that the transaction will take place this month, even though the company has some built-in motivation to quickly make good on its payback promise. —KA
The Los Angeles Times:
“We are pleased that Bank of America is moving ahead with plans to pay the taxpayers back in full,” a Treasury Department spokesman said Wednesday. “As banks replace Treasury investments with private capital, confidence in the financial system increases, taxpayers are made whole, and government’s unprecedented involvement in the private sector lessens.”
The company’s search for a new CEO has been hampered by conditions imposed on it by the federal government. Banking regulators have subjected the company to increased scrutiny, demanding improvements in risk management and the addition of people with financial experience to the board of directors.
In addition, the government’s “pay czar,” Kenneth R. Feinberg, has the authority to approve or veto compensation for senior executives at Bank of America and other recipients of exceptional assistance.
Some candidates to replace Lewis said they would not work under those conditions, according to a person familiar with the search.
Repaying the government in full would allow Bank of America to pay its next chief executive any amount the board sees fit.