U.S. officials want Bank of America to pay $500 million to end a tentative pact that has the government sharing its losses on certain assets. If the banks wants to end

 the arrangement the government feels that an appropriate fee was required. The Treasury and the Federal Reserve are asking the bank to pay at least $300 million and would prefer $500 million.

 Bank of America is offering to repay part of its bailout money. Repaying this would mean that BofA would no longer be categorized as an “exceptional” aid recipient – a title that has brought about a lot of controversy. 

These recent announcements have to do with extra federal aid BofA received to acquire Merrill Lynch. BofA’s goal is to pay back $20 billion of a total $45 billion in aid that they have received – including TARP money.  The government had agreed to potentially absorb a big chunk of losses on $118 billion in assets owned by the bank and Merrill Lynch.  BofA is supposed to take the first $10 billion in losses and the government would cover 90% of the rest. 

The bank is supposed to pay Treasury $4 billion in preferred stock carrying an 8% dividend in return for its protection. BofA also is paying the Federal Reserve $236 million.