Can you put a price on confidence? News that Bank of America agreed to pay the US government $425m to lay to rest a $118bn asset guarantee programme struck in January has prompted howls that taxpayers are again getting a raw deal. After all, BofA’s market value had tripled from its low by the time the bank decided it wanted out of the agreement in May – and that rally was underpinned by government support.

Taxpayers should not feel too hard done by. The asset protection agreement was never signed and losses on the asset pool, which was subsequently reduced by almost a third but never finally agreed, had not yet approached the first $10bn that BofA agreed to absorb. Had BofA issued, as agreed, $4bn in preferred stock and additional warrants to the Treasury, the bank would in effect have been paying upfront to guarantee assets with an average maturity of about five years. Instead, it is handing over $228m to reflect the value of the preferred stock premium and associated dividends, covering about four months from January to May and pro-rated for the smaller asset pool. The remaining $197m includes the warrants’ valuation and a fee to the Federal Reserve.