Bank of America to repay $45 billion to US (TARP)

[ProSense]

Bank of America to repay $45 billion to US

by Rob Lever Rob Lever – 17 mins ago
WASHINGTON (AFP) – Bank of America said Wednesday it had reached an agreement to repay the US government the entire 45 billion dollar investment it provided the bank under a program to stabilize the financial system.

The largest US bank by assets will be making the largest single payback under the Troubled Asset Relief Program, a program approved by Congress last year at the height of the financial crisis.

<...>

Many banks repaid the government earlier this year, escaping tougher scrutiny from regulators that could include limits on executive pay and bonuses at bailed-out firms.

"We are pleased that Bank of America is moving ahead with plans to pay the taxpayers back in full," a Treasury official said in an email to AFP.

more

[ClarkUSA]

1. With 5% interest. Taxpayers have already gotten over $70B+ in interest payments from other banks.

This taxpayer is pleased. :)

[girl gone mad]

4. You're pleased to be out over $100B and assured a final loss of..

tens of billions? That's just on TARP, and doesn't include any of the other cash for trash arrangements with no oversight or the 0% loans they are getting from the government while they rape consumers with 30% interest and sleazy fee structures.

I'd say you're a little too easy to please.

I guess you're just wishing and praying that when the http://www.annaly.com/blog/?p=735">smoke and mirrors game they are playing with low loss reserves and stock dilution comes crashing down on them, we won't actually make good on those implicit guarantees? Or maybe massive currency devaluation just doesn't phase you.

[ClarkUSA]

5. Does your doomsday crystal ball predict the end of the universe, too?

:eyes:

[girl gone mad]

6. Funny you should ask, since in a former life I was a cosmologist.

But you didn't address the issues at hand. Bank of America has been lowering their loss ratios even as losses continue to rise. They do not have adequate loss reserves. If theydid, they would be showing losses rather than profits, therefore would be unable to repay TARP. Bank of America is receiving other Fed bailouts, including virtually interest free loans for trash collateral, even as they rip off their customers with usurious interest rates and fees. Bank of America is diluting their common stock to help repay TARP, and the prime reason they want to get out of TARP is because they don't like the pay restrictions that came along with those funds. Now that they have an implicit government guarantee against insolvency along with those myriad other bailout funds, they feel secure enough to break the TARP chains that bind.

My comments have nothing to do with crystal balls. The TARP Inspector General stated very plainly that our losses from the bailout will amount to http://www.bloomberg.com/apps/news?pid=20601103&sid=aC7a6J6Uz_88">tens of billions of dollars. The http://seekingalpha.com/article/168611-bank-loss-reserves-not-an-easy-challenge">reserve ratio and http://www.bloomberg.com/apps/news?pid=20601087&sid=atkiuTj5qmwc&pos=1">stock dilution information is not a secret. One doesn't need to be psychic, just informed.

Bank of America’s two rounds of U.S. funding included $20 billion to help cushion losses tied to the takeover of Merrill Lynch & Co. The planned repayment will ease the bank’s effort to replace Chief Executive Officer Kenneth D. Lewis, who announced his departure in September.

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.”

Ugh again. At least with J.P. Morgan I can squint my eyes real hard and suppose that they might be getting close, especially given J.P.'s relatively small commercial loan book. But looking at Wells Fargo and Bank of America, these are still banks that are going to struggle to keep up with losses as far as I can see.

“We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic,” he said yesterday at the Bloomberg Washington Summit. “It’s almost certainly going to be a loss.”

“Tens of billions of dollars are likely to be lost on the automotive bailout,” Barofsky said. In addition, some banks that received TARP money are failing, so the aid they received will be wiped out.

[ClarkUSA]

7. So does that mean you know when the universe ends or not?

:rofl:

[girl gone mad]

12. Way to avoid the topic.

Can you just admit that you were wrong? We will lose money on TARP. Bank of America doesn't have enough money in reserves to cover their ongoing losses. Bank of America is massively diluting stock. BAC's weakness will remain the taxpayer's problem so long as we are allowing our Fed to run the printing presses and trade dollars for worthless garbage. How much this may hurt us is still an unknown, but few would argue that an insolvency fueled dollar death spiral is completely out of the question. At best, we're headed for Japan style lost decades. If you've got a good reason to think our debts are of no consequence, let us in on it.

[ClarkUSA]

34. What I avoid is disingenuous out-of-date/cut-and-paste doomsday blather.

I'll let ProSense speak for me... since I have a hot date tonight.

:)

[girl gone mad]

41. News from today and a week ago is out of date?

You really have nothing, huh?

[ClarkUSA]

45. See Reply #10. Lather, rinse, repeat.

:)

[PBS Poll-435]

Wells Fargo is going to be fine. Even after they saved the US Government's behind

With the Wachovia debacle.

[PBS Poll-435]

8. ..

DU Hiccup.

[ProSense]

10. "The TARP Inspector General stated very plainly that " And

he did it before Bank of America made its announcement. The fact is, that Banks have an incentive to pay the money back: the CEO/bonus pay clause. It's the reason JP Morgan repaid it's loan. Goldman Sachs and Morgan Stanley have repaid the loans.

More than $200 billion of TARP remains.

There is also the interest earned. So you can make your dire predictions, and continue to ignore that the administration and Democrats took a program that could have been completely abused by banks and made it work.

[girl gone mad]

17. We're still losing tens of billions, even after the BAC repayment.

Riddle me this: How much did BAC get through TLGP?

It's disingenuous of bailout apologists to pretend that the relatively miniscule toxic asset relief program was the only cash giveaway the big banks got.

[ProSense]

22. "disingenuous of bailout apologists to pretend that the relatively miniscule [TARP]..."

This thread is about TARP. Feel free to start your own thread conflating anything you like to fit your doom and gloom.

[girl gone mad]

31. First, you're not an administrator of this site, therefore it isn't really your place..

to tell me what I can post in this thread.

Second, my statement absolutely applies to TARP, which is just one facet of the $23.7 Trillion taxpayers are on the hook for. You can't have an honest conversation about toxic asset relief without understanding that the banks found more convenient and less restrictive ways to get out from under their bad loans, which means that even as they pay back the money Paulson and congress gave them, the public sector is still not free from the burden of their bad debts.

[ProSense]

35. "tell me what I can post in this thread"?

It was a suggestion, not an order. The fact is, BoA repaying the TARP funds has absolutely nothing to do wiht your all encompassing spin.

[girl gone mad]

43. The fact that BAC got a $45 Billion interest free infusion through the FDIC..

using trash collateral (which they have no plans to pay back) has nothing whatsoever to do with BAC's announcement that they can now repay the $45 Billion they owe from TARP and get out from under the compensation restrictions and avoid a $4 Billion dividend payment?

Are you sure about that?

[ProSense]

44. "Are you sure about that?" Yes, you conflate, you spin, you predict doom

We've been down this road before.

Your $23 trillion spin is applied to everything from the stimulus to the TARP.

[Clio the Leo]

19. I KNEW I didn't dream that.....

.... I tried to find an article on that last week and, of course, nothing.

[ClarkUSA]

36. You didn't.

I have the articles filed away somewhere. I'm going out soon, so PM me and I'll remember to look for it tomorrow.

Or you can ask ProSense. ;)

[doc03]

2. That should pay for the troop surge in

Afghanistan.

[Cha]

3. Obama and Biden got in to take of all the

bushcheney nightmare years and we're getting results already.

[AllentownJake]

9. Catch 22

You get pissed about banks not lending and at the same time you are mad that they aren't paying their low interest government loan.

So Bank of America takes 45 billion off their balance sheet, due to fractional lending standards now have to raise capital and will do less lending.

Of course if given the choice, the executives at Bank of America will do less lending and have no pay caps.

This is neither good news or bad news.

[ProSense]

11. "This is neither good news or bad news." Nonsense

Getting the money back is absolutely good news.

[AllentownJake]

13. When the FED chairman and Treasury Sec. are complaining banks aren't lending

and you are under a fractional reserve system, taking 45 billion off a bank's balance sheet is money that is not lent.

Neither good news or bad news.

Now copy and paste a quote and say nonsense again.

[PBS Poll-435]

14. Just which section of the balance sheet do you think BoA's TARP money resides?

:shrug:

[AllentownJake]

16. I'm guessing they are paying the Treasury back in Cash or a Cash Equivalent

Unless they have made a deal to give Geithner shitty bad investments at PAR value for forgiveness of debt.

Which would not surprise me.

[girl gone mad]

38. They're raising $20 billion by diluting the common stock by another 15%.

Another gem from the press release: "repaying TARP will save the company approximately $3.6 billion in annual dividend costs from the TARP investment."

But repayment is contingent on shareholder and Board approval.

[AllentownJake]

40. They've been hoarding cash for months

the $20 billion is the other part.

At least they are paying in cash it appears.

[girl gone mad]

42. But they won't be paying back the $45 Billion in TLGP borrowings..

any time soon. Convenient figure, no?

[ProSense]

15. You are conflating two issues

Repaying the loan has nothing to do with bank lending. The TARP was designed to save the industry, and one of the outcomes should be increased lending, but failing to repay the loan would be a sign that the bank failed. Repaying the loan is good news, and doesn't prohibit an increase in lending.

[AllentownJake]

18. Do you understand how a bank works

A bank is required to keep $1 for every $10 lent. So if the bank takes $45 billion of cash and returns it to Treasury, how much money to do they have to raise to keep their capital ratios where they were.

They are accelerating their payments due to the fact there is an exec compensation cap. They either need to raise $45 billion in capital to be at the lending capacity they were before deciding to accelerate their repayment or reduce their lending capability.

[ProSense]

24. Do you?

I don't give a rat's ass about Bank of America. The quicker the US gets the money back the better.

"They are accelerating their payments due to the fact there is an exec compensation cap."

You think?

[AllentownJake]

26. Yes but if credit is really the life blood of the American economic sector

Do you see the duplicity.

That is why I said neither good nor bad.

[ProSense]

29. "Do you see the duplicity. "

I see someone desperately trying to spin good news as neutral.

[AllentownJake]

30. No, if I was trying to spin I'd say this is awful.

I think I've been pretty willing in the recent past to shit on your economic threads with stronger language than neither good or bad.

[girl gone mad]

23. The money was simply funneled from another government handout..

with less oversight.

Sort of like applauding your brother for paying back the $20 loan you gave him last month with a $20 bill he just took from your wallet.

[AllentownJake]

28. Doubt that

If there are shenanigans it is probably Treasury took bad assets at Par value.

[HughMoran]

20. They already paid $2.5B in dividends, but paid off early to save $3.5B

In the long term, this is good news.

[AllentownJake]

21. In the long term we are all dead

:-)

Keynse.

[HughMoran]

25. Soon enough I'm sure

Well, the Administration was already getting on their case for not lending (and restricting exec pay) - I'm not sure we were getting much from this deal anyway. I'll never do business with BofA.

[AllentownJake]

27. They are destroying their own future economic prospects

Sending out letters to millions of customers raising their interest rates and cutting their credit lines a month before Christmas is not going to be the type of PR that will be easily forgiven...for years.

I expect there will be a name change after the second wave of defaults and the system is cleaned of bad debt and the full recovery begins.

[HughMoran]

32. Probably

BofA has become a bad word in many circles.

[AllentownJake]

33. They'll merge with a Regional Bank and take their name

See First Union.

[HughMoran]

37. Union Bank vagina preferred over Walmart puckered anus

In a recent opinion poll, consumers preferred the new Union Bank logo, a swollen red vagina, to Walmart’s yellow puckered anus, by a margin of two-to-one.

“People have always associated the banking industry with that very special female part,” according to Mel Wornauschky, Vice President of Marketing for Union Bank. “In fact, many of our employees are playfully called ‘Vaginas’ by our loyal customers.”

While admitting that more males than females prefer the new logo, Wornauschky insists the use of the vagina makes for more than just a cool letterhead.

“It reflects our corporate philosophy,” he explained. “We detached it from its hiding place and made it the new symbol for banking excellence. We’re saying, ‘Come in and apply for a loan. No need to hide anything. At Union Bank, you can expose your vagina — or your wife’s. And as tempting for us as that might be, we will never screw you — or your wife.”

http://theskunk.org/2009/08/union-bank-vagina-preferred-over-walmart-puckered-anus/


:rofl: (I literally laughed my ass off when I found this link)

[AllentownJake]

39. Now that is the funniest thing I've read all day

Thanks for that.

[cry baby]

46. a lot of that $ comes from my daughter's overdratft fees!!! she is 21...

and hasn't quite gotten her act together when it comes to finances!!:spank:

[HamdenRice]

47. Thanks for the light comic relief!

:hi:

[cry baby]

49. ;-)

nt

[HamdenRice]

48. Great news! Making money while saving the world is always a good thing! nt

[ClarkUSA]

50. "Bank bailouts appear to be paying off." (sourced link and quotes -->)

December 4, 2009

The government's bailout of the banking system is turning out to be far from the fiscal sinkhole so many had feared.

The $700-billion Troubled Asset Relief Program, known as TARP, was reluctantly created by Congress last fall despite criticism that it was a huge risk that would only encourage the profligate ways of Wall Street. But in recent months, tens of billions of dollars have begun flowing back from banks to the U.S. Treasury.

Bank of America Corp.'s decision this week to repay one of the largest chunks -- $45 billion -- reflects the stunning turnaround of the financial industry and demonstrates that the government's unpopular medicine appears to have saved the patient. And the price tag isn't as large as expected.

"It turns out, actually, TARP -- as wildly unpopular as it has been -- has been much cheaper than any of us anticipated," President Obama said Thursday at a White House summit on creating jobs.

Federal Reserve Chairman Ben S. Bernanke, who pushed for the fund's creation, made a similar point at a Senate hearing Thursday on his nomination to a second term.

"Unlike some of the scare stories about $700 billion being thrown away, I do believe . . . in the end that there'll be something close to a break-even there," Bernanke said.

The TARP fund may break even, that is, on its first and biggest use of taxpayer money: investing billions -- $205 billion as of Monday -- directly in banks.

Including Bank of America's expected repayment, $116 billion -- more than half -- of that amount has already come back to the government, along with about $10 billion in dividends and interest.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=433x38451