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Bank of America to Repay $45 Billion in Bailout Fund

NEW YORK — Bank of America Corp. has been having a tough time finding a new CEO willing to accept the restrictions that came as a condition of bailout funds. But recruitment is sure to be easier now that the bank plans to pay back its $45 billion in aid in just a few days to free itself from government oversight and pay restraints.

The bank said in a statement it will use available cash and raise $18.8 billion in capital to repay the money, which it received during the height of the credit crisis last year and after its purchase of Merrill Lynch & Co. earlier this year.

Bank of America has been searching for a successor to CEO Ken Lewis since it announced in late September that he planned to retire on December 31. But having accepted the Troubled Asset Relief Programme funds, the bank has been under close oversight and had to answer to pay czar Kenneth Feinberg, which hasn’t made the job very attractive.

“It removes the stigma that we’ve had as a company,” spokesman Bob Stickler said of the planned repayment. “We become more attractive to a CEO candidate. Whether that means we get somebody external is impossible to say.”

The bank has said it was considering candidates from inside and outside the company. Stickler said a decision is expected “in the near future.”

“It’s great news,” said Alan Villalon, senior research analyst at Minneapolis-based First American Funds.

Villalon said the effort to repay TARP might be a signal that the bank is focused on luring an external candidate.

Banking analyst Bert Ely agreed that the restrictions put forth by federal pay czar Kenneth Feinberg have likely been an obstacle to finding the best possible CEO candidate. —