Bank of America Corp. said Wednesday it has repaid the entire $45 billion it owed U.S. taxpayers as part of the Troubled Asset Relief Program.
Also Wednesday, CNBC reported Citigroup Inc plans to pay back TARP by raising money in an equity offering that could be announced as early as this Thursday, citing sources.
Bank of America, which announced its agreement with the U.S. Treasury to repay TARP last week, funded the repayment through a combination of cash on hand and the sale of $19.29 billion of securities that would convert into common stock. The stock increase remains subject to shareholder approval.
In a prepared statement, CEO Ken Lewis said the company cleared a key hurdle in demonstrating the economy's broader health, and said the bank looks "forward to continuing to play a key role in the economic recovery."
Bank of America was among hundreds of banks that received government support through the government's TARP program. The bank received $25 billion as part of the initial round of investments when the credit crisis peaked last fall. It received an additional $20 billion in January shortly after it acquired Merrill Lynch in what was a heavily scrutinized deal.
Repayment of the funds frees the bank from the government restrictions that have hampered its search for a new CEO, including executive pay limitations.
Citi: We're in position to repay TARP
Citigroup Chairman Dick Parsons told CNBC that Citigroup was in talks with regulators about repaying its $45 billion bailout from the bailout program.
"We believe Citigroup is in a position to repay the TARP money, but there is an active discussion we have to have with regulators ..." said Parsons, who was at New York Governor David Paterson's speech on the economy on Wednesday at the Museum of American Finance.
Citi spokesman Jon Diat declined to comment.
The reports come two days after Reuters reported on Monday that Citigroup and the U.S. government disagreed over how much the bank should raise to repay taxpayers, according to people briefed on the matter. The people said talks could take weeks or months.
BofA struggles to find new CEO
Bank of America has been searching for a successor to Lewis since it announced in late September that he planned to retire on Dec. 31.
Bank of America's board met Tuesday to discuss potential replacements for Lewis, but no decision has been made. Bank of America spokesman Scott Silvestri said Wednesday that a decision will be made "in the near future."
Bank of America is considering both external and internal candidates to succeed Lewis.
BofA's Chief Risk Officer Gregory Curl and Brian Moynihan, the head of consumer banking, are among the top contenders. However, both men have been criticized by analysts as lacking experience or being too close to the Merrill deal.
Repayments from banks that received support from the bailout program will soon total $116 billion, including the $45 billion from BofA. That's out of a total of $453 billion that the government has extended to banks, insurers, automakers and other companies under TARP.
On Wednesday the government said it would extended the $700 billion financial bailout program until October. That sets up a conflict between Democrats, who want to use some of the leftover money to help generate jobs, and Republicans, who say it should be used to reduce budget deficits.
AP and Reuters contributed to this report.
FAQs
On January 16, 2009, Bank of America received $20 billion and a guarantee of $118 billion in potential losses from the U.S. government through the Troubled Asset Relief Program (TARP). This was in addition to the $25 billion given to the bank in the fall of 2008 through TARP.
What banks are the government bailout? ›
As part of the plan, the government bought preferred stock in troubled banks such as Bank of America, Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, Wells Fargo, Bank of New York Mellon and State Street Bank. Most of the investments have since been resolved, and the government made a profit off of many of them.
How much money did the government give Bank of America? ›
WASHINGTON/NEW YORK (Reuters) - Bank of America Corp was rescued by the U.S. government on Friday through a $20 billion bailout and a guarantee for almost $100 billion of potential losses on toxic assets to cushion the blow from a deteriorating balance sheet at Merrill Lynch & Co, its recently acquired brokerage.
Is Bank of America government owned? ›
If you're interested in the financial sector, you may have wondered who owns Bank of America (BAC -0.05%). Like any publicly traded company, Bank of America is owned by its shareholders.
What was the biggest Bank bailout in history? ›
The biggest bailout for the banking industry was the government's Troubled Asset Relief Program (TARP), a $700 billion government bailout meant to keep troubled banks and other financial institutions afloat. The program ended up supporting at least 700 banks during the 2007–08 Financial Crisis.
What is the $700 billion bailout for banks? ›
President Bush signed the bill into law within hours of its enactment, creating a $700 billion dollar Treasury fund to purchase failing bank assets. The revised plan left the $700 billion bailout intact and appended a stalled tax bill.
Who pays for FDIC bailouts? ›
Most of the cost will likely be covered by proceeds the Federal Deposit Insurance Corp. receives from winding down the two banks. Any costs beyond that would be paid for out of the FDIC's deposit insurance fund.
Who pays for bailouts? ›
A bailout is when a business, an individual, or a government provides money and/or resources (also known as a capital injection) to a failing company.
Can the government take money from your bank account in a crisis? ›
The government can seize money from your checking account only in specific circ*mstances and with due process. The most common reason for the government to seize funds from your account is to collect unpaid taxes, such as federal taxes, state taxes, or child support payments.
What family owns Bank of America? ›
Bank of America is one of the largest consumer banks in the United States, with $3 trillion in customer deposits and other assets. The largest shareholder is Warren Buffett's Berkshire Hathaway, which holds 13% of all marketable shares.
In August 2011, Buffett invested $5 billion of Berkshire's capital in Bank of America preferred stock that paid a 6% dividend yield, generating $300 million in annual income. However, the preferred stock also came with warrants to buy 700 million shares of Bank of America common stock for $7.14 each.
What is the controversy with Bank of America? ›
The CFPB has taken numerous actions against Bank of America for violating federal law. In July 2023, the CFPB and the Office of the Comptroller of the Currency (OCC) ordered Bank of America to pay over $200 million for illegally charging junk fees, withholding credit card rewards, and opening fake accounts.
Does a Chinese company own Bank of America? ›
No, Bank of America is not partly owned by China. It is an American bank.
Is BofA in financial trouble? ›
Bank of America's Financial Health
In recent years, Bank of America's financial performance has been relatively stable. In 2022, the bank reported a net income of $20.4 billion, a decrease from the previous year's $27.4 billion. However, its revenue increased from $91.2 billion in 2021 to $95.2 billion in 2022.
Who is the majority owner of Bank of America? ›
Who owns the most shares of Bank of America (BAC)? Berkshire Hathaway Inc. owns the most shares of Bank of America (BAC).
Is Bank of America going under? ›
Bank of America's Financial Health
In recent years, Bank of America's financial performance has been relatively stable. In 2022, the bank reported a net income of $20.4 billion, a decrease from the previous year's $27.4 billion. However, its revenue increased from $91.2 billion in 2021 to $95.2 billion in 2022.
Did Merrill Lynch get bailed out? ›
Bank of America acquired Merrill Lynch in late 2008 during the financial crisis. The $50 billion deal came as Merrill Lynch was within days of collapse, effectively rescuing it from bankruptcy.
How much did Bank of America pay in lawsuit? ›
Bank of America to pay $8 million in class-action case for 'deceptive' transfer fees.
