B of A Pays $425M to End Fed Guarantee

I was going to say that $425 million seemed like a lot of cash, but then I remembered the $30 billion they took in taxpayer monies.

“Bank of America Corp., the biggest U.S. bank, agreed to pay the government $425 million for an unused guarantee of Merrill Lynch & Co.’s assets as the bank tries to cut reliance on federal support after two bailouts.

The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. will get the money, according to a Bank of America statement today. Regulators were seeking $300 million to $500 million, according to a person familiar with the matter who spoke before the agreement was announced.

The payment would end a dispute over what the bank owes the U.S. for a promise to help absorb losses on $118 billion of holdings, mostly at Merrill Lynch. The federal guarantee helped seal the takeover of the New York-based brokerage after fourth- quarter losses spiraled past $15 billion. While the accord was announced in January, an agreement was never signed and the bank resisted paying.”

What an exquisite waste of taxpayer capital . . .

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Source:
Bank of America Agrees to Pay $425 Million for Merrill Backstop
Margaret Popper and David Mildenberg
Bloomberg, September 21 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5noRhggsFYI

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