Fascinating story from Bloomberg on Bank of America’s move to walk away from fees associated with $118b. in federal backstop protection. Members of Congress say that the bank should pay at least part of the $4b. in fees outlined in connection with federal support for toxic assets held by Merrill Lynch, which BofA acquired in a shotgun marriage brokered by regulators.

The bank says, not so fast, the feds never finalized and signed any such agreement on the “loss sharing” effort. Ahem.

Quite apart from the he said-he said bit and the few billions at stake, how can both BofA and the feds reverse course on what was sold to the markets in January as an iron-clad backstop for ML assets? Where is the FEC in this? Investors were told, quite explicitly in hopes of influencing their opinion of BofA and of the entire sector, that BofA had up to $118b. in federal backing. Now that it turns out the support was not needed, it is OK to just walk away, to pretend it never happened? Sounds a little too neat and clever.

Almost weekly we are setting dangerous, dangerous new lows in fair dealing with the public as it pertains to the nation’s financial workings.

Update: Excellent comparison of what BofA is trying to do to you or I trying to get out of paying insurance premiums because we didn’t need the coverage.