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.
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 Charlotte, N.C.-based bank from the government restrictions that have hampered its search for a new CEO, including
executive pay limitations.
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.
Treasury said that with Bank of America's $45 billion repayment, the total amount of repaid TARP funds is now $116 billion. That's out of a total
of $453 billion that the government has extended to banks, insurers, automakers and other companies under the program.
Treasury now estimates that total bank repayments could reach up to $175 billion by the end of 2010, the agency said in a release Wednesday. That
would cut total taxpayer exposure to the banks by almost three-quarters from the peak. Total bank investments that were expected to cost $76
billion now are projected to bring a $19 billion profit, the agency said.
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.
Bank of America shares fell 2 cents to $15.39 Wednesday.
"That mechanical cleanup has proven to be pretty effective," Rinehart said.
The ruptured pipeline, which is about 5 feet above the ground, is not affecting production from the Prudhoe Bay oil field, North America's largest
oil
Rinehart said the definitive reason for the most recent spill won't be known until an investigation is completed.
BP is currently on probation for the 2006 spill after pleading guilty to a misdemeanor conviction and paying $20 million in fines and restitution.
That spill was blamed on corrosion in a pipeline.
Rinehart said several weeks before the rupture the line was shut down because of restricted flowAnother larger pipeline adjacent to the pipe was
handling the extra volume.
Rinehart said the paired pipelines were each equipped with individual temperature sensors near where the lines enter the processing center. He said
he did not know if the sensors indicated there was a problem. A BP employee discovered the rupture in the line during a routine early morning
inspection.
The line was last inspected in 2008 and found to be serviceable, he said.
After the rupture, the pipe was X-rayed and it was determined that there was approximately 1,300 feet between two large "ice plugs," as the
buildups are called. Engineers were considering methods for melting the plugs when it split. Those methods include applying heat, or introducing
deicer and warm crude into the line.
Rinehart said ice plugs can form in pipelines and occasionally are a problem, even sometimes ending in a rupture.
"They are a feature of operating in the Arctic," he said. "You try not to have them happen. When they do, you deal with them."
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