Bank of America to return $43m to Pike, housing agency

The Massachusetts Securities Division has obtained a pledge from Bank of America Corp. to buy back auction-rate securities from some government entities, including the Massachusetts Turnpike Authority and the Massachusetts Housing Partnership, according to a person involved in the talks.

The deal will free up $18 million for the financially troubled turnpike, and $25 million for the housing agency, a division spokesman confirmed.

Bank of America declined to comment.

The Turnpike Authority was reimbursed for $4.4 million in auction-rate securities by a different firm, UBS Financial Services Inc., in May. That buyback agreement was reached by state Attorney General Martha Coakley.

The Securities Division's negotiations with Bank of America are ongoing, as it seeks to press the banking giant to buy back auction-rate holdings from all of its retail investors.

The Globe reported last week that Bank of America warned some large clients about looming trouble in the auction-rate market as early as last December, while continuing to sell the bonds to individual investors.
(By Beth Healy, Globe staff)