NEW YORK — Bank of America’s surprise move to pay back $45 billion in federal bailout money ratchets up pressure on rivals Wells Fargo and Citigroup to get out from under the government’s thumb. But don’t expect it to happen any time soon. Many banks still face big losses on loans as people fall behind on billslosses that could further erode their capital and put them in danger.
Moreover, the government may be reluctant to let them repay until they’re confident that no further assistance will be needed.
The TARP repayment helps BofA’s efforts to recruit a successor to chief executive Ken Lewis, who has announced that he plans to retire Dec. 31.
But it also widens the competitive gap between banks that have repaid TARP funds and those that haven’t, said Douglas Elliott, a former investment banker at J.P. Morgan who is now a fellow at the Brookings Institution.
“It puts more pressure on Citigroup and Wells to pay it back when they can — which is good,” Elliott said. “We want them to be under pressure to act.” The Associated Press
