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Bank of America warrants auction set

Associated Press / March 2, 2010

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WASHINGTON - The Treasury Department said yesterday it will auction 272 million warrants for Bank of America stock to recoup taxpayer money from the controversial financial bailout fund.

Treasury said the auctions will take place tomorrow and will be divided into two classes of warrants. Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price.

Bank of America Corp. repaid the government $45 billion in December as part of its efforts to sever ties with the $700 billion bailout program. The auction of the warrants is taking place because Bank of America and the Treasury could not agree on a price for the warrants.

Treasury said that 150.38 million warrants, which it labeled “A warrants,’’ would carry a minimum bid price of $7 per warrant. It said that another 121.79 million warrants, designated “B Warrants,’’ would carry a minimum bid price of $1.50 each.

The auction will be conducted by Deutsche Bank Securities Inc.

Bank of America, based in Charlotte, N.C., got $25 billion from the government’s Troubled Assets Relief Program in October 2008 at the height of the financial crisis and then another $20 billion in January 2009 to help offset losses it absorbed as part of its acquisition of Merrill Lynch.

Last week, Bank of America’s shareholders approved an increase in the number of the bank’s common shares to fund repayment of the government bailout money.