By MICHAEL GRAY
Very interesting how Bank of America has come out to say how it MAY pay back a portion of the funds given to it to complete the Merrill Lynch deal at the end of last year.
Chief Ken Lewis had no word on when or if the bank could payback its initial $45 billion in TARP funds. The $20 billion in Merrill money pushed BofA into a higher level of scrutiny from Uncle Sam, which meant bonuses were under the control of Pay Czar Feinberg.
In addition to the $65 billion the feds stepped to backstop $120 billion in bad paper from the Merrill deal, which BofA was only on the hook for the first $ 10 billion.
So Benny the Hook is putting the screws to Lewis to start paying the vig on this protection. Bernanke is looking for as much as $500 million in payments.
This is not money that would go back to the public; this is cash going to the private bankers, who make up the Federal Reserve. The taxpayers are still on the hook for the $65 billion and whatever losses come from the bad BofA/Merrill paper.
So, before the end of the year – near bonus season – BofA will find a way out from under the government’s thumb, perhaps and pay Benny the Hook his protection money.
Mark to ’Morrow
A brief reminder to all those news outlets running specials on the year anniversary of Lehman Bros’ demise, when do you think we will hear for the Securities and Exchange Commission on moving back to the mark-to-market accounting of toxic paper?
All of that paper is still rotting on bank balance sheets inside a concrete bunker call mark-to-model. My guess is that most of the paper has a half-life of 30 years and if you ignore it long enough it will dissipate into the void of accounting’s black hole.
I don’t think the feds will push for a change anytime soon.
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