Bank of America might have recently made a plan to payback TARP money to the government, appearing to be a classic “Rob Peter to Pay Paul” move.

The corporation recently reported a $2.24 billion bank loan loss due to consumers struggling to pay bills as covered in this Huffington Post article.

This figure adds into the bank’s total loan and leases loss for a cumulative $35.83 billion. Banks had predicted for some time the losses would keep adding up and will continue to rise in the New Year if unemployment does the same. It doesn’t appear Bank of America is in any position to pay off its debts.

Yet Bank of America outlined a strategy to repay all $45 billion dollars in bailout funds to the government. This is where tricks of the trade show through: Bank of America is able to issue $18.8 billion worth of new stock in a public offering, plus issue $1.7 billion in common stock to employees. The hope is by reducing the cost of these stocks, the market will be enticed to invest making this an attractive supply-and-demand scenario. Also, $4 billion worth of assets will be sold. In fact, paying off debt now could save the company approximately $3.6 billion in annual dividend costs from the TARP investment, reported Bank of America.

Will the mathematics pay off TARP and other in-house bank debt? If so, this strategy could have other owning bank corporations like Citigroup and Wells Fargo attempting to follow suit or formula.

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