Bank of America Rushes to Part Company With Citigroup, AIG: Today's Outrage

Bank of America is working out a deal with the Feds to part company with the likes of Citigroup and associate with a more respectable class of banks such as Wells Fargo.
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NEW YORK (

TheStreet

) --

Bank of America

(BAC) - Get Report

took long enough to find the TARP exit, but it finally got one foot out the door.

A deal with the Feds is being hashed out to repay at least part of the $45 billion taxpayer bailout provided to Bank of America from the Troubled Asset Relief Program, according to the

Wall Street Journal

.

How long has BofA CEO Ken Lewis been saying that he regretted taking the extra $20 billion in bailout money to help ease the takeover of

Merrill Lynch

(MER)

?

Well, he's finally getting to prove he didn't need the money as his bank brokers

a deal with the feds

to repay that portion of the taxpayer dole BofA received.

I'm sure it wasn't easy getting to this point. One of the reasons it took so long may well be the Obama administration's reluctance to let go of the power it inherited after the incursions into free enterprise orchestrated by the Bush administration.

Repaying $20 billion in TARP funds will allow the bank to escape some of the restrictions placed on the "exceptional" aid recipients -- including the irksome scrutiny of the new federal pay czar. We all know how Bank of America and Merrill love their pay perks!

If this deal goes through, Bank of America will part company with the likes of

Citigroup

(C) - Get Report

,

AIG

(AIG) - Get Report

,

Fannie Mae

(FNM)

and

Freddie Mac

(FRE)

- considered the most troubled companies in the nation because of the amount of government intervention required to keep them afloat.

Now BofA will get the chance to associate with a more respectable class of banks such as

Wells Fargo

(WFC) - Get Report

, which managed to elevate its stature in the financial world with some decent earnings reports despite the fact that it has yet to repay the TARP funds it received.

So what did it take for Bank of America to get the Feds to ease their grip?

The government is reportedly pushing BofA to pay between $300 million and $500 million to end a quasi agreement that provided federal protection against potential losses on more than $100 billion in risky assets, according to The

Wall Street Journal

. Apparently the protection pact was never finalized so there has been some debate about whether Bank of America should have to pay anything for the "implied" protection, according to the Journal.

Who knows what other terms Bank of America may need to accept. I wouldn't be surprised if the Obama administration requires some kind of secrecy pact. That's been an all-too-common occurrence during the government's intervention, as I've noted in previous columns (

No Surprise That Feds Run Citigroup

and

Banks on Double Secret Probation

).

The one thing the Feds keep forgetting is that every time they squeeze a bank like BofA, it's the shareholders who get bruised.

--Written by Glenn Hall in New York.

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Glenn Hall is the New York-based Editor in Chief of

TheStreet.com

. Previously, he served as deputy editor and chief innovation officer at

The Orange County Register

and as a news manager at

Bloomberg News

in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at

The Journal-Gazette

in Fort Wayne, Ind. His work also has been published in a variety of newspapers including

The Wall Street Journal

,

The New York Times

and

International Herald Tribune

. Hall received a bachelor's degree in journalism and political science from The Ohio State University and a certificate in project and program management from Boston University.