Bank of America To Pay Back TARP, Pay New CEO Whatever It Wants

Bank of America has reached an agreement to pay back the $45 billion in TARP dollars it required to stay solvent last year. The first $25 billion came in October when Hank Paulson force fed capital to all the major banks. The following $20 billion in extra cash came later, when Ken Lewis finally realized that maybe purchasing Merrill Lynch for $29 dollars a share the Friday before the investment bank would've filed for bankruptcy wasn't such a hot idea. Bank of America is the first of the seven companies that received "exceptional" assistance from taxpayers to pay the government back and it is doing so ahead of schedule so this is being viewed positively by the market. With this move, B of A will be free from the shackles of government meddling in its bonus pool and hopefully will be able to lure another CEO with promises of a big fat paycheck. For those who don't recall, in an unanticipated move, Ken Lewis resigned, leaving the board scrambling for another CEO, because somehow, they were blindsided by the fact that their embattled CEO, despite growing a beard and looking somewhat haggard, would leave ahead of schedule. Apparently, nobody wants the CEO job because of fears of going head-to-head with the Pay Czar. The truth is, I'm sure the board has looked at a handful of candidates, all of whom think they need $50 million a year to properly run the bank. In reality, all of the money boards have thrown at CEOs for the past decade didn't stop any of them from taking too much risk, blowing up their companies, requiring government bailouts and tanking our economy, so I'm still pretty amazed that this idea of a rock star CEO persists in banking. Frankly, I'm sure if B of A's board broadened its search a bit, it could find someone who would do a decent job without requiring a huge pay guarantee. But, better to just pay back the government its $45 billion and dilute shareholders AGAIN by raising yet another $18 billion or so in capital. That way, we can all bury our heads in the sand, go back to business as usual, and forget that 2008 ever happened..