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article imageBank of America to Repay TARP

By Michael Bearak     Dec 2, 2009 in Business
Bank of America is preparing to pay back the $45 billion dollars it borrowed from the U.S. government as part of the Troubled Assessts Recovery Program (TARP).
Yahoo is reporting that North Carolina-based Bank of America will be ready in the next few days to pay back the entire amount that it borrowed during the height of the credit crisis. The move is expected to make it easier to find a new CEO to replace Ken Lewis who will be leaving the bank on December 31.
Bank of America found itself in trouble around the time it acquired Merrill Lynch & Co. and was forced to borrow a total of $45 billion from the U.S. Government as part of the TARP program last year. Now the bank has positioned itself to use available cash, as well as to raise the remaining $18.8 billion in capital to pay back the loan.
"It removes the stigma that we've had as a company," spokesman Bob Stickler said of the planned repayment. "We become more attractive to a CEO candidate. Whether that means we get somebody external is impossible to say."
As of Oct. 31, nearly 50 financial companies returned a total of $72.3 billion in bailout money. Other big banks, including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, repaid their bailout funds after they were given permission to do so by the government in June.
The stock market responded positively with the news that saw Bank of America's stock climb 3.3% in after hours trading. The bank plans to raise the remaining $18.8 billion with common equivalent securities. This is pending board approval. Yahoo also reported that the company plans to sell certain business units totaling about $4 billion as well.
Just because they will have paid back their TARP money doesn't mean the road is going to get any easier for BofA as they lost $2.2 billion in the third quarter of 2009. They are also facing an investigation as to whether or not they misled investors going into the Merrill Lynch acquisition.
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