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BofA repays all of government bailout funds

Bank of America said it has repaid the entire $45 billion it owes U.S. taxpayers as part of the Troubled Asset Relief Program. Citi also said it was talking with regulators to pay back loans.
/ Source: msnbc.com news services

Bank of America Corp. said Wednesday it has repaid the entire $45 billion it owed U.S. taxpayers as part of the Troubled Asset Relief Program.

Also Wednesday, CNBC reported Citigroup Inc plans to pay back TARP by raising money in an equity offering that could be announced as early as this Thursday, citing sources.

Bank of America, which announced its agreement with the U.S. Treasury to repay TARP last week, funded the repayment through a combination of cash on hand and the sale of $19.29 billion of securities that would convert into common stock. The stock increase remains subject to shareholder approval.

In a prepared statement, CEO Ken Lewis said the company cleared a key hurdle in demonstrating the economy's broader health, and said the bank looks "forward to continuing to play a key role in the economic recovery."

Bank of America was among hundreds of banks that received government support through the government's TARP program. The bank received $25 billion as part of the initial round of investments when the credit crisis peaked last fall. It received an additional $20 billion in January shortly after it acquired Merrill Lynch in what was a heavily scrutinized deal.

Repayment of the funds frees the bank from the government restrictions that have hampered its search for a new CEO, including executive pay limitations.

Citi: We're in position to repay TARP
Citigroup Chairman Dick Parsons told CNBC that Citigroup was in talks with regulators about repaying its $45 billion bailout from the bailout program.

"We believe Citigroup is in a position to repay the TARP money, but there is an active discussion we have to have with regulators ..." said Parsons, who was at New York Governor David Paterson's speech on the economy on Wednesday at the Museum of American Finance.

Citi spokesman Jon Diat declined to comment.

The reports come two days after Reuters reported on Monday that Citigroup and the U.S. government disagreed over how much the bank should raise to repay taxpayers, according to people briefed on the matter. The people said talks could take weeks or months.

BofA struggles to find new CEO
Bank of America has been searching for a successor to Lewis since it announced in late September that he planned to retire on Dec. 31.

Bank of America's board met Tuesday to discuss potential replacements for Lewis, but no decision has been made. Bank of America spokesman Scott Silvestri said Wednesday that a decision will be made "in the near future."

Bank of America is considering both external and internal candidates to succeed Lewis.

BofA's Chief Risk Officer Gregory Curl and Brian Moynihan, the head of consumer banking, are among the top contenders. However, both men have been criticized by analysts as lacking experience or being too close to the Merrill deal.

Repayments from banks that received support from the bailout program will soon total $116 billion, including the $45 billion from BofA. That's out of a total of $453 billion that the government has extended to banks, insurers, automakers and other companies under TARP.

On Wednesday the government said it would extended the $700 billion financial bailout program until October. That sets up a conflict between Democrats, who want to use some of the leftover money to help generate jobs, and Republicans, who say it should be used to reduce budget deficits.

AP and Reuters contributed to this report.