September 22, 2009 – 11:28 am

Bank of America is taking the hard line at every turn with the government whose citizens saved it. The bank is the recent recipient of a two bagger of cash transfusion from the taxpayer, in one arm went $45 billion under TARP and in the other arm was a $118 billion backstop against Merrill losses. Without it, all the government strong arming in the world couldn’t make Kenny boy wrap his arms around Merrill. It was a loss sharing deal under which the the best the taxpayer could do is break even.

Bank of America agreed to pay USD 425 million to government agencies, including the Treasury Department, to exit an arrangement under which public funds might have been used to shoulder losses on USD 118 billion worth of risky assets from the Merrill Lynch takeover. The option was never used, but the government has argued that the bank benefited from the promise of protection.

The move is part of a broader effort by the bank to reduce its reliance on various forms of government support. Charlotte, N.C.-based BofA has been one of the largest benefactors of the government’s financial rescue programme, receiving a total of USD 45 billion from the taxpayer-financed USD 700 billion financial bailout programme.

Now that the taxpayer financed mini bubble has allowed the bank to profit on trading gains, the bank says that it shouldn’t have to pay for the loss sharing provision, since it never went into effect. You might think they’d be grateful for the implicit guarantee that made counterparties want to do business, or you might think that they’d repay the full amount as a show of good faith or even, heaven forefend, gratitude. You would of course be wrong.

Thus, taxpayers were owed $4,427 billion for the guarantee. They got $425 million. That is less than 10 cents on the dollar. Just because you don’t burn down your house, the insurance company will not give you a ninety percent refund of the premiums.

By my math that’s $.425 B /4.427B =0.096 and that is indeed less than a flat dime to the dollar.
See how that works; Heads they win, Tails Screw You. Or in actuallity: Heads Screw You, Tails Screw You.

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