Business

U.S. to get $425 million from Bank of America

Bank of America reached an agreement Monday to pay the United States $425 million to exit a costly arrangement where the government would have shouldered losses on risky assets from the bank's takeover of Merrill Lynch.

The fee, which comes after weeks of haggling, will be paid to the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. It's part of a larger move by Bank of America to get out from under the government's thumb.

Bank of America is paying the fee to exit an arrangement in which the government had promised to cover $118 billion in risky assets Bank of America acquired in the Merrill Lynch deal earlier this year. The arrangement was never used, but the government has argued that the bank benefited from the promise of protection.

By ending the arrangement, Bank of America will be able to avoid costly fees. It would have had to pay Treasury about $320 million a year in dividends. In addition, it would have had to pay more than $230 million in fees on the risky assets the government was backstopping.

  Comments