What’s the fallout of paying off TARP money when you’re really not ready? Citigroup ended up losing $7.6 billion in the 4th quarter of 2009, and Bank of America ended up reporting a loss of around $5.2 billion for the same time period.

They stated that their loss was due to having to pay back the federal government, but that’s a minimal reason. The biggest problems they had was collecting on credit cards and bad mortgage deals, having to hire a CEO, paying out lots of bonuses, and I hate to say it this way, but basically being stupid. Once again, like Citigroup, there really wasn’t a need to have to pay off this loan so early, even though they were having problems finding someone to take over their CEO position at the amount they were allowed to offer per the government’s restrictions.

Here’s the other side of this issue. They’re reporting that $4 billion of their loss was paying back the government, who they owed $45 billion, but a big part of their loss, which they say helps to show improvement, was charging off what they considered as uncollectible debts owed them by others.

What most people don’t know is that when banks write off debt, they get paid by insurance companies for a percentage of that write off. Then they get sneaky and sell that uncollectible debt to someone else, collection agencies, who then come after you and try to collect more money than you actually have to pay them. Check out the link here on knowing your charge off amounts.

So, this means B of A made money by writing off money they couldn’t collect; isn’t that a shame? I guess didn’t think it was worth it to help any of those people who have mortgage problems because of some of their sneaky underhanded deals in some states to refinance their mortgages so they had a chance to stay in their homes; shame. And even with this loss, they’re still slated to pay $4 billion in bonuses, which comes to around $400,000 per eligible employee; man, I knew I went into the wrong profession years ago.

Oh well; maybe raising those checking fees will help them make a profit this year.