Bank of America today announced that it had paid off the entire $45 billion it borrowed from the Troubled Assets Relief Program during the height of the global financial crisis. That means it’s free and clear of its obligations to the government in terms of limits on executive compensation and the rest. Notably, it seems that it was the desire to get out of under those executive compensation limits that drove the decision.
It’s important to remember that the TARP money was appropriated federal dollars loaned out to these derelict banks. And that money — real money that we borrowed and would have to pay back if the banks went under — was by no means the extent of federal largesse. There were all sorts of moving numbers around by the Fed and set up special entities. And most of that never came with the same kind of stings attached. So I think it’s fair to say that $45 billion is by no means the true extent of what the US taxpayer (judged in terms of who holds the final liability) did for BofA. Still, I think it’s fair to say that most people a year ago would have been glad to hear that they were able to pay back this cash.
Late Update: TPM Reader KR notes a point I’d forgotten to mention, which is that even within the TARP spending, you have cases like AIG — money that is pretty clearly gone forever. In some cases, AIG was the counter-party to these banks who’ve now washed their hands of TARP by paying off their direct loans. So the AIG bailout was in effect a bailout of these institutions too. But on a more general level there’s little doubt that if the federal government and the Fed hadn’t stepped in to prevent AIG’s collapse, a lot of these now healthy banks would have been washed into oblivion.
