Is Bank of America well positioned to repay TARP funds?

It was certainly big news when it was leaked that Bank of America is in talks with government officials about paying back a portion of the $45 billion in TARP funds. It would at least be symbolically powerful for the bank to make a partial payment, especially in light of the fact that JPMorgan Chase has already repaid its TARP funds.

Bank of America would like to distance itself from Citigroup. That's for certain.

But Fortune raises a good question: Is the bank really ready to pay back any TARP funds? Few analysts seem willing to pronounce that Bank of America is over the hump. Credit card, commercial and residential loans are each huge vulnerabilities, and the risks are still palpable. We've said all along that it would be an abject disaster if banks that sought to end their TARP burdens were forced back onto the public dole. But the government might allow them to make a small payment, as a sign of good faith to the new board.

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