http://www.foxbusiness.com/story/markets...new-tarp-money/
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Bank of America will receive at least $15 billion in additional bailout money from the U.S. government to help complete its merger with Merrill Lynch, a source told FOX Business on Thursday.
In October, BofA received $15 billion in TARP funding under the Treasury’s Capital Purchase Program for banks. At that time, Treasury also pledged to inject $10 billion into Merrill Lynch, once its acquisition by BofA was complete. When the purchase of Merrill was completed on January 1 the injection was completed.
The source said BofA will use the additional $15 billion or so in TARP funds to help the bank digest and integrate Merrill.
The source said that after BofA and Merrill announced their merger deal last fall, Merrill’s financial health continued to deteriorate. In mid-December, BofA executives met with Treasury Secretary Hank Paulson and asked him for assurances that if the bank needed additional TARP capital because of the Merrill merger, Treasury would provide it. Otherwise, the executives told Paulson, BofA would cancel the Merrill acquisition. The source said Paulson agreed to the request.
In addition to the Citi bailout:
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In addition, the source said to expect a Citigroup-type restructuring at BofA in the second Treasury investment.
A second government infusion at Citigroup entailed:
Treasury invested an additional $20 billion in Citi in exchange for non-voting preferred stock, plus warrants for an additional 10% of Citi preferred stock issued to the government (or $2.7 billion in additional preferred stock.)
This was under a new program, the “Targeted Investment Program” – as opposed to the Capital Purchase Program, as Citi and the other big banks maxed out at the CPP limit of $25 billion
Citi isolated $306 billion in troubled assets into a separate government guaranteed asset pool, with backstops and future losses shared by Treasury (TARP), the FDIC and the Federal Reserve (“ring-fenced,” according to Treasury). Treasury and FDIC received $7 billion in new Citi preferred stock as fees for this insurance (Treasury got $4 billion, FDIC got $3 billion)
As part of the FDIC’s participation, Citi agreed to the IndyMac mortgage modification procedures. (BofA already has a similar program in place, following its Countrywide acquisition.)
The government imposed on Citi tougher dividend restrictions and executive compensation rules.
Quote:
Bank of America will receive at least $15 billion in additional bailout money from the U.S. government to help complete its merger with Merrill Lynch, a source told FOX Business on Thursday.
In October, BofA received $15 billion in TARP funding under the Treasury’s Capital Purchase Program for banks. At that time, Treasury also pledged to inject $10 billion into Merrill Lynch, once its acquisition by BofA was complete. When the purchase of Merrill was completed on January 1 the injection was completed.
The source said BofA will use the additional $15 billion or so in TARP funds to help the bank digest and integrate Merrill.
The source said that after BofA and Merrill announced their merger deal last fall, Merrill’s financial health continued to deteriorate. In mid-December, BofA executives met with Treasury Secretary Hank Paulson and asked him for assurances that if the bank needed additional TARP capital because of the Merrill merger, Treasury would provide it. Otherwise, the executives told Paulson, BofA would cancel the Merrill acquisition. The source said Paulson agreed to the request.
In addition to the Citi bailout:
Quote:
In addition, the source said to expect a Citigroup-type restructuring at BofA in the second Treasury investment.
A second government infusion at Citigroup entailed:
Treasury invested an additional $20 billion in Citi in exchange for non-voting preferred stock, plus warrants for an additional 10% of Citi preferred stock issued to the government (or $2.7 billion in additional preferred stock.)
This was under a new program, the “Targeted Investment Program” – as opposed to the Capital Purchase Program, as Citi and the other big banks maxed out at the CPP limit of $25 billion
Citi isolated $306 billion in troubled assets into a separate government guaranteed asset pool, with backstops and future losses shared by Treasury (TARP), the FDIC and the Federal Reserve (“ring-fenced,” according to Treasury). Treasury and FDIC received $7 billion in new Citi preferred stock as fees for this insurance (Treasury got $4 billion, FDIC got $3 billion)
As part of the FDIC’s participation, Citi agreed to the IndyMac mortgage modification procedures. (BofA already has a similar program in place, following its Countrywide acquisition.)
The government imposed on Citi tougher dividend restrictions and executive compensation rules.
