Bank of America sign in Pasadena, Calif.
Bank of America sign in Pasadena, Calif. - 
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Kai Ryssdal: The CEO search committee at Bank of America is breathing a huge sigh of relief today. B of A announced this morning it's finally able to pay back the $45 billion it got from taxpayers last fall. Seeing as how it wasn't all that long ago that B of A was still on the ropes, we asked Marketplace's Steve Henn to explain the turnaround.

STEVE HENN: Bank of America was one of the largest recipients of TARP money. And Paul Miller at Friedman Billing's Ramsey says paying back all of that cash in one fell swoop is a big positive but...

PAUL MILLER: They still have to now focus on making money. This company hasn't made money in the last couple of quarters on a core basis.

So if Bank of America is not making big profits where did all this money to pay back the government come from?

MILLER: Well, it's coming from basically not lending out any money. So as their loan portfolio has shrunk by about $100 billion over the last year instead of buying securities or making more loans they put it into a cash account.

So if you paid off a B of A loan in the past year, chances are the bank just held on to that money. TARP was supposed to help healthy banks continue lending during the financial crisis, but some analysts, like Miller, now wonder if it had almost the opposite effect. Bank of America is using more than $26 billion from its cash horde to cover TARP debts, and it will raise $23 billion more by selling stock and other assets.

In the end, taxpayers lost nothing and even made a few billion in interest. So what's the government going to do with all this money now?

BARNEY FRANK: I think the best thing you can do right now is to give more money to state and local governments to avert layoffs and let them even hire some more people.

Congress Barney Frank is chair of the House Financial Services Committee. He would also back more infrastructure investments, and he'd like to see at least $2 billion be spent helping unemployed Americans make their mortgage payments. All these ideas would require a new law, but Frank says its about time to think about Main Street.

In Washington, I'm Steve Henn for Marketplace.