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Bank of America said that it had agreed to pay 425 million US dollars to the US government to exit a guarantee programme put in place to cover potential losses in its takeover of Merrill Lynch.
"We are pleased to resolve this matter and move forward," Kenneth Lewis, chief executive and president of Bank of America Corporation, said in a statement.
The agreement ends a government guarantee of up to 118 billion US dollars in assets that authorities offered to pave the way for Bank of America's acquisition of Merrill Lynch in January 2009.
BoA had considered pulling out of the government-led takeover after learning of Merrill's heavy losses.
Under the pressure of authorities, Lewis completed the takeover, and the US Treasury increased its aid to the bank from the Troubled Asset Relief Programme to 45 billion US dollars from 25 billion US dollars.
In addition to the 45 billion taxpayer dollars from the TARP, the US government also agreed to guarantee 90 per cent of any losses on a 118-billion-dollar pool of risky assets owned by the bank and Merrill Lynch. It was this guarantee that the bank and the government agreed to terminate Monday.
In its statement Monday, the bank recalled that it has taken several steps toward reducing its reliance on government support and return to normal market funding, particularly by raising capital and issuing 10 billion US dollars in bonds that are not backed by the government.
US regulators said they could impose new charges on Bank of America over billions of dollars in bonuses paid to Merrill Lynch executives just before it took over the troubled firm last year.
The move came nearly a week after a judge overruled a multi-million dollar settlement between the bank and federal regulators over the bonus issue and ordered the case go to trial.
Bank of America had earlier agreed to pay a penalty of 33 million dollars to the authorities "for misleading investors" about 3.6 billion dollars in bonuses paid to Merrill executives just as the firm was to be merged with Bank of America to avoid a Merrill bankruptcy.
The bonuses were kept secret from shareholders of both firms. The bank did not deny or admit to the charges.
Merrill Lynch's payment of cash bonuses on December 29, just ahead of the finalization of Bank of America’s acquisition, sparked an outcry in the United States over executive compensation, particularly involving government bailed-out firms.
Merrill had posted a bigger-than-expected 2008 fourth-quarter loss of 15.8 billion dollars and Bank of America had received 20 billion dollars in federal aid to help it acquire the nearly bankrupt firm.
Orders for US durable goods fell 2.4 percent, government data revealed Friday in a survey showing surprising weakness in the manufacturing sector.
The decrease following a revised surge of 4.8 percent in July, the Commerce Department said.
The drop contrasted with market expectations of a 0.4 percent increase. Manufacturing has been leading the US recovery from recession, although some analysts say this is largely due to rebuilding of factory inventories instead of growing consumer demand.
The monthly report on durable goods is subject to volatility due to big orders for aircraft and defense equipment.
doesn't it sound familiar about the ways bureaucracy is handled over here in our little shore? example: Increase GST to help poor & needies? well deserving million dollars pay to stamp corruption? and many more
"We are pleased to resolve this matter and move forward," Kenneth Lewis, chief executive and president of Bank of America Corporation, said in a statement.
The agreement ends a government guarantee of up to 118 billion US dollars in assets that authorities offered to pave the way for Bank of America's acquisition of Merrill Lynch in January 2009.
BoA had considered pulling out of the government-led takeover after learning of Merrill's heavy losses.
Under the pressure of authorities, Lewis completed the takeover, and the US Treasury increased its aid to the bank from the Troubled Asset Relief Programme to 45 billion US dollars from 25 billion US dollars.
In addition to the 45 billion taxpayer dollars from the TARP, the US government also agreed to guarantee 90 per cent of any losses on a 118-billion-dollar pool of risky assets owned by the bank and Merrill Lynch. It was this guarantee that the bank and the government agreed to terminate Monday.
In its statement Monday, the bank recalled that it has taken several steps toward reducing its reliance on government support and return to normal market funding, particularly by raising capital and issuing 10 billion US dollars in bonds that are not backed by the government.
US regulators said they could impose new charges on Bank of America over billions of dollars in bonuses paid to Merrill Lynch executives just before it took over the troubled firm last year.
The move came nearly a week after a judge overruled a multi-million dollar settlement between the bank and federal regulators over the bonus issue and ordered the case go to trial.
Bank of America had earlier agreed to pay a penalty of 33 million dollars to the authorities "for misleading investors" about 3.6 billion dollars in bonuses paid to Merrill executives just as the firm was to be merged with Bank of America to avoid a Merrill bankruptcy.
The bonuses were kept secret from shareholders of both firms. The bank did not deny or admit to the charges.
Merrill Lynch's payment of cash bonuses on December 29, just ahead of the finalization of Bank of America’s acquisition, sparked an outcry in the United States over executive compensation, particularly involving government bailed-out firms.
Merrill had posted a bigger-than-expected 2008 fourth-quarter loss of 15.8 billion dollars and Bank of America had received 20 billion dollars in federal aid to help it acquire the nearly bankrupt firm.
Orders for US durable goods fell 2.4 percent, government data revealed Friday in a survey showing surprising weakness in the manufacturing sector.
The decrease following a revised surge of 4.8 percent in July, the Commerce Department said.
The drop contrasted with market expectations of a 0.4 percent increase. Manufacturing has been leading the US recovery from recession, although some analysts say this is largely due to rebuilding of factory inventories instead of growing consumer demand.
The monthly report on durable goods is subject to volatility due to big orders for aircraft and defense equipment.
doesn't it sound familiar about the ways bureaucracy is handled over here in our little shore? example: Increase GST to help poor & needies? well deserving million dollars pay to stamp corruption? and many more
