INSTANT VIEW: Bank of America says to repay TARP funds

NEW YORK (Reuters) - Bank of America Corp said on Wednesday that it has worked out a deal with the government to repay $45 billion in taxpayer bailout funds by raising new capital.

The No. 1 U.S. bank by assets will repay the funds by using $26.2 billion in excess liquidity and $18.8 billion in proceeds from the sale of "common equivalent securities."

Bank of America shares, which initially fell on the news, rebounded and were up 3.6 percent in electronic after-hours trading.

The following is reaction from industry analysts and investors:

MATT MCCORMICK, PORTFOLIO MANAGER AT BAHL & GAYNOR IN

CINCINNATI

"I think this is great for Bank of America and I also think it is probably beneficial for the next CEO."

"I think it is clearly going to beneficial for attracting talent."

"I don't know anybody who likes TARP except the government. It was clearly about control and trying to manage risk."

MICHAEL SHELDON, CHIEF MARKET STRATEGIST, RDM FINANCIAL,WESTPORT, CONNECTICUT:

"How the stock performs would probably depend on the terms of a potential equity or capital raise over the near term. Longer term, it seems if the bank can get the government out of its business plans, that would represent a positive."

BILL FITZPATRICK, ANALYST COVERING FINANCIAL STOCKS AT

OPTIQUE CAPITAL MANAGEMENT IN MILWAUKEE:

"They're trying to get out from under the government umbrella. But as a shareholder, I'm not happy about a capital raise. I didn't think they were in any position to repay TARP. I was looking for that in another 12 to 18 months. Given all the risks that are still embedded in the economy, it's more prudent to beef up your capital levels. I'd prefer to see them exercising more caution."

ANTON SCHUTZ, PRESIDENT OF MENDON CAPITAL, ROCHESTER, NEW

YORK

"The bank is very, very liquid, they have plenty of short term investments in the balance sheet, so their ability to write a check isn't the issue.

"It is certainly important that he (Greg Curl) has been able to work with the government. If he gets a promotion out of this, having a good relationship is very important for this company and it shows an improving relationship. It's a feather in his cap.

"Clearly things have gotten better in terms of asset values, in terms of earnings power and I think the government would like to get their money back. If the government gets back $45 billion reduces the deficit by $45 billion. It's also a feather on Obama's cap.

"I own the stock and I would be interested in buying more".

(Reporting by Juan Lagorio, Steve Eder, Carol Valetkevitch and Dan Wilchins)