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: The University of Chicago Law School Faculty Blog

Geithner Needs to Tell Bank of America to Cut a $4 billion Check to the U.S. Treasury, Now.

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>Sometimes blog entries don???t need to be that long. Sometimes, the issues are cut and dry. The newest revelations about Merrill Lynch are a case in point. 

Thanks to the Financial Times, we now all know that Merrill Lynch handed out $4 billion of our bailout  money in year-end bonuses. That represents almost 10 percent of the $45 billion infusion that Bank of America received under the first tranche of the TARP bailout.

[For those who forgot the timing of all this: Bank of America announced it was buying Merrill in September 2008. Bank of America got its first TARP injection of $25 billion in October 2008. Merrill Lynch gets board approval for the $4 billion in bonuses in December 2008, while reporting losses of about $27 billion. Bank of America gets a second shot of $20 billion in January 2009.

President Barack Obama has warned that this might not be good for the banks. Dave Krasne on the NYT op-ed page> writes about ???foolhardy behavior.??? And Andrew Cuomo has subpoenaed Merrill???s ex-boss.

But there???s no need for expensive litigation, nor, for that matter, veiled threats. Our new Treasury secretary, Timothy Geithner, should simply demand that Bank of America immediately cut a check to the United States Treasury for $4 billion. Now. It???s that simple.

{If you are interested, I am intervening more regularly and often at greater length in the French weekly, L???Express, at this site here}

Full post as published by The University of Chicago Law School Faculty Blog on January 27, 2009 (boomark / email).

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