CHARLOTTE, N.C. (
Bank of America
said Monday it has agreed to pay $425 million to extinguishing a contentious pact with regulators related to $118 billion worth of toxic assets.
The Charlotte, N.C.-based bank will also exit a program to guarantee new debt issuances.
"We are pleased to resolve this matter and move forward," CEO Ken Lewis said in a statement.
When BofA agreed to buy
last year, the government extended an offer to guarantee assets - mostly Merrill's - for a fee. However, the bank has never used the guarantees, nor has it officially signed a contract with the feds.
Now that Bank of America is preparing to exit its various bailout programs, the tentative deal has become a hot-button issue. Regulators were arguing that BofA ought to pay a fee at the higher end of the $300 million to $500 million range, since it derived a benefit from the implied guarantees. The bank said it shouldn't have to pay anything, since it never used them and no official agreement was ever reached. BofA eventually softened its stance, and it has been in talks with the Treasury Department and Federal Reserve to settle upon a middle-ground fee of late.
Separately, BofA also received approval to exit the Federal Deposit Insurance Corp.'s debt guarantee program -- a sign that the private market is confident enough in the bank's viability to charge an interest rate on BofA bonds that is not burdensome.
In related news, BofA is
set to meet with lawmakers on Tuesday
to discuss an investigation into its Merrill Lynch acquisition as well. The company also named Charles "Chad" Holliday, the chairman of
to its board.
-- Written by Lauren Tara LaCapra in New York