After taking billions of dollars of taxpayer money as part of the Troubled Asset Relief Program, Bank of America has now positioned itself to repay the money to the federal government as part of the agreement. However, Bank of America’s plans to repay the funds have been halted over a disagreement concerning how much additional capital the bank must raise to satisfy regulators.
The timing of the disagreement is difficult for the bank, as President Obama’s so-called “pay czar” has just set a variety of restrictions on executive compensation that has lowered compensation for the top employees of Bank of America …read more

Pay czar Kenneth Feinberg has decided to bring the hammer of his authority crashing down on the executive pay packages of the seven firms receiving the most federal aid. According to media reports, Feinberg and the government will limit the pay of the twenty five highest-paid executives at these companies, with salaries taking the biggest cuts.
In all, salaries are expected to plummet 90 percent on average and total compensation will most likely fall by about 50 percent, marking a huge decrease in the amount that many executives will be receiving as compensation this year. The executives of AIG’s financial products …read more

According to a report from the research arm of Congress, American International Group, one of huge financial institutions to experience extremely dire straits as a result of the financial crisis, has reached a point of stability. However, the same report has raised doubts concerning whether or not AIG will ever be able to restructure and pay back the money it borrowed from the government.
 
This report from the Government Accountability Office came at the same time as Representative Edolphus Towns of New York was preparing to raise the possibility of renegotiating A.I.G.’s debt. Towns, the chairman of the House Committee on …read more

Citigroup Inc.’s Chief Executive Officer Vikram Pandit is not worried about the future, according to his recent statements concerning his bank’s plans. Pandit stated that he has “little doubt” that his company would quickly return to profitability once the economy starts to show definite signs of recovery.
 
Pandit also spoke of his plans to repay back the Federal Reserve for the bailout money his company received, stating that it would do so in compliance with regulators when it is in a better spot. Due to the government’s increased interest in the country’s financial institutions, Pandit has been trying to get the …read more

On Tuesday, Freddie Mac announced that the company will have a new COO as of September 14th. Bruce M. Witherell will be the new COO and will report to Charles E. Haldeman, Jr. — the CEO of Freddie Mac.
When you think of Freddie Mac, you probably think of federal bailout money. The mortgage company has received billions upon billions of dollars in bailout capital from the feds. Many experts believe that it may never be possible for Freddie Mac to pay back the government.
With that type of pressure, Witherell won’t have an easy job. However, Haldeman thinks he is up …read more

The recession has been brutal for many businesses but the airline industry has suffered dramatically from soft ticket demand and unpredictable gas prices. Considering the dire straits that many of the world’s most prominent airlines are facing, a federal bailout for the airline industry may not be too far in the future.
 
Airlines typically look forward to the second quarter as a time of the year when travelers most frequently travel by airplane to get to their exotic vacation destinations. However, this year’s outcome has been very disappointing for the airline industry, as the recession, combined with a global swine flu …read more

Although it recently took $40 billion from the government in order to stay afloat, American International Group’s CEO Edward Liddy has expressed his confidence that AIG is on its way to quickly paying back its federal debt. AIG chalks this up to a sweeping decrease in risks in its derivatives business.
 
AIG has not released any sort of predictions regarding the value of its stock increasing or decreasing in the near future, much to its shareholders’ chagrin. However, Liddy has called AIG’s chances of repaying the government “excellent” and promises a changing business model in the coming months.
 
Liddy revealed his predictions …read more

Not long ago, it seemed like every company that qualified was gladly accepting federal bailouts. On Tuesday, Allstate became the second insurance company to turn down federal bailout money. Last week, we reported that Ameriprise Financial was the first to say no.
“We applaud the Administration’s decision to include insurers in the U.S. Treasury’s programs, said Allstate CEO Thomas Wilson. “Given Allstate’s strong capital and liquidity positions, however, we will not participate in this program.”
According to Allstate, the company has more than $23 billion in highly liquid assets or cash. Additionally, Allstate says they have more than $12 billion in GAAP …read more

With the United States federal government handing out bailouts to try to stimulate the nation’s economy, many companies around the country have happily gobbled up the bailout offers. However, on Friday we learned of the first company on record to outwardly turn down bailout funding.
Ameriprise Financial is the company to turn down the bailout offer. This company is in the financial planning field and claims to have a history in the field that dates back more than 110 years.
Said Ameriprise Financial CEO Jim Cracchiolo: “While we appreciate Treasury’s approval of our application, we have elected not to accept funding. We …read more

A recent report by the Congressional Budget Office predicts that the financial sector will require much more bailout money than initially estimated. In fact, the report says that the initial estimates were short by more than $165 billion.
The new number for the bailout of the financial sector is at approximately $365 billion. In January, that same estimate was less than $190 billion. The Congressional Budget Office blames the increased cost of the bailout on the securities in question now having larger yields.
Two companies that will be eating a lot of federal bailout money are Freddie Mac and Fannie Mae. These …read more