So, Bank of America is writing a big, fat, $45 billion check to the U.S. to pay back the money we handed the bank under the TARP program. Great news, right? Not so fast. Wall Street bad boy Henry Blodget points out that BofA is paying the money back while taking out ultra-low-interest loans from the government — loans that don’t come with any of the restrictions bundled with TARP funds.
According to Blodget,
What Bank of America has done is simply replace one form of taxpayer sponsored capital (TARP) with equity and another form of taxpayer sponsored capital–loans from the Fed. Those loans carry super-low interest rates, so they’ll help Bank of America make more money at taxpayer expense. Those loans also, importantly, come with NONE of the restrictions that TARP does.
And taxpayers are on the hook every bit as much with the Fed loans to Bank of America as they were for the TARP capital. The only thing that has changed is that taxpayers don’t have any control anymore. Bank of America can now take that money and do whatever it wants with it, including paying out tremendous bonuses for making stupid loans
Gee, thanks for paying us back, BofA. Remind us again, why are you too big to fail?