Looks as if we are not dealing with “too big to fail” anymore and now we are in “too broke to fail” phase of this bailout.  According to the WSJ article, the large commercial bank is having problems giving back our taxpayer supported TARP money.  I can see after the banks left in the TARP program are receiving severe pay and compensation restrictions, they would want to get those mandates from over their institution as soon as they can.  Bank of America’s defense is that they have already raised $40 billion dollars through equity offerings.  The government feels that the bank still does not have enough capital to absorb losses so of course we know who is going to win this battle.  I hope they brought BofA’s blanket and binky too.

The dispute is gaining urgency in the wake of restrictions handed down this week by the Obama administration’s “pay czar” Kenneth Feinberg which clipped compensation for top employees of Bank of America and six other firms receiving large sums of government aid.

Bank of America wants to return the government’s $45 billion investment, arguing that it has raised $40 billion of new equity since May and is able to survive without government help. Some government officials, concerned about the bank’s ability to absorb losses, believe it ought to replace at least some of the federal money with new capital above and beyond the $40 billion of equity identified so far this year, people familiar with the matter said.

Bank of America’s effort is caught up in a broader, behind-the-scenes discussion within the U.S. government over how best to gauge whether a bank is ready to exit the Treasury Department’s Troubled Asset Relief Program — known as TARP — which provided the bailout funds.

Analysis: Let them pay back their TARP debt and if they can not absorb losses and writedowns in the coming years then let them fail and prove once and for all that in our capitalist system, all companies are not “too big to fail”.