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Bank of America repays all of government TARP funds
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.
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.
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