As of 6:30 p.m. EST, Bank of America's promise to pay back, soon, the $45 billion in TARP funds that it owes the government was the lead story on the Wall Street Journal, the Financial Times, and Bloomberg News. (BofA's lengthy press release explaining its strategy is here.)
For Bloomberg and the WSJ, the effort was described as, to borrow the Journal's words, a move that "will allow the bank to begin escaping pay and other restrictions imposed by the U.S." BofA plans to use around $26 billion that it happens to have lying around and raise another $18.8 billion via sales of stock and warrants to buy stock.
Since the U.S. government never really managed to use the leverage that it had obtained by bailing out Bank of America, other than to make some token gestures at limiting compensation, and possibly ousting Ken Lewis as CEO, there will be few tears shed at the prospect of the bank getting out of hock to Uncle Sam. But I'm still intrigued at the spin. Instead of being portrayed as a sign of health or market stability, the effort to return TARP funds is instead seen as a first step to freedom. The freedom to pay executives far more than they deserve! The freedom to thumb noses at regulators, and in fact, to redouble efforts at lobbying to make sure that regulators don't interfere with their god-given right to steer us directly into the next financial cataclysm.
It's hard to even imagine that earlier this year there was even a whisper of a suggestion that banks as big as the Bank of America should be nationalized or forcibly broken up. The status quo is resuming with amazing speed. At the rate events are moving, maybe we can have another financial crisis in time for the midterm elections.
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