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Dec. 3 2009 - 6:42 pm | 164 views | 2 recommendations | 3 comments

Bank Of America Pays Back TARP Funds 2+ Years Ahead Of Schedule

Bank Of America

In Feb 2009, the company reported this…

Bank of America Corp. expects to pay back U.S. Treasury relief funds within the next three years, and “categorically” does not need further government funding, Chief Executive Ken Lewis told CNBC’s Maria Bartiromo in a televised interview Friday. Bank of America has received up to $45 billion in funds from the Trouble Asset Relief Program.

10 months later…from their press release…

PRNewswire/ — Bank of America today announced that it will repay U.S. taxpayers their entire $45 billion investment provided under the Troubled Asset Relief Program (TARP). The repayment will be made after the completion of a securities offering.

To date, Bank of America has paid $2.54 billion in dividends to the U.S. Treasury on the TARP investment. Repaying TARP will save the company approximately $3.6 billion in annual dividend costs from the TARP investment.

Some of this money is coming from their existing assets, and some of it is coming from an equity sale. But they’re paying it back.

Now, there are those who are questioning if they should be doing that or not. After all, do they have enough capital?

Yes, they do…

After the stock offering and some other capital moves, Bank of America’s Tier 1 capital ratio will stand at 11%, and Tier 1 common ratio will stand at 8.5% — stronger metrics than Wells Fargo, JPMorgan Chase or U.S. Bancorp.

Only Citigroup has higher capital ratios, due to a huge preferred-to-common conversion, but given the government’s large ownership stake and Citi’s long path to reorganization, few expect it to repay TARP in the same manner.

Long story short, we’ve made money on every single TARP repayment so far AND averted a financial meltdown AND unfroze the credit market. Yes, the big banks aren’t completely out of the woods yet, but the brush is getting a lot thinner.

Here’s the question: To those who claimed that we’d never see this money again…how long before we hear some mea culpas?

(Photo: AP via Daylife)


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  1. collapse expand

    So when to, we the people, who own the Treasury, get OUR dividend checks from this miraculous event?

    When is the tax cheat, Geithner, in charge of the Treasury send out the checks…..?

    Why is a tax cheat in charge of the United States Treaury?

    • collapse expand

      Andy,

      So the government asked you for additional money out of your paycheck to help the banks recover? Oh, that’s right, they didn’t. So why do you think you should get any money back?

      And about the whole tax cheat meme…from the WSJ.

      “The tax issue relates to Mr. Geithner’s work for the International Monetary Fund between 2001 and 2004. As an American citizen working for the IMF, Mr. Geithner was technically considered self-employed and was required to pay Social Security and Medicare taxes for himself as both an employer and an employee.”

      “The IMF and World Bank reimburse employees, including U.S. citizens, for their U.S. income taxes. They don’t, however, make contributions toward Social Security and Medicare taxes, which individuals are expected to pay on their own.”

      “In 2006, the IRS audited Mr. Geithner’s 2003 and 2004 taxes and concluded he owed taxes and interest totaling $17,230, according to documents released by the Senate Finance Committee. The IRS waived the related penalties.”

      “During the vetting of Mr. Geithner late last year, the Obama transition team discovered the nominee had failed to pay the same taxes for 2001 and 2002. “Upon learning of this error on Nov. 21, 2008, Mr. Geithner immediately submitted payment for tax that would have been due in those years, plus interest,” a transition aide said. The sum totaled $25,970.”

      Long story short, each time he saw that he owed money, he paid it immediately. This happens ALL THE TIME to people who have consulting gigs, etc. So call him whatever you want, but name calling isn’t appreciated on this blog. It makes you look bad, not Geithner.

      In response to another comment. See in context »
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    I run the multi-partisan blog Donklephant. If you never been before, it's a site where everybody is welcome to come and have an open, honest debate about the news of the day. Sometimes it works and sometimes it doesn't, but it's always interesting.

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