Bank of America Corp. is progressing down the road to recovery, but its biggest obstacles still lie ahead.

The Charlotte company resolved some long-standing issues with regulators this week and is working on a timetable for repaying $45 billion in aid from the Troubled Asset Relief Program, in installments. Those steps were noteworthy but pale in comparison to the legal, political and economic issues that stand between the company and normalcy, many observers said.

"I don't think they have put that much behind them," said William Black, a economics and law professor at the University of Missouri-Kansas City and a former senior financial regulator. "The company has been very good at putting obstacles in front of themselves. Nobody is happy with them. They haven't repaired relations with investors, and they still have to contend with their exposure to the economy."

B of A chief executive Kenneth D. Lewis is following textbook managerial procedure, addressing issues that the company has some moderate control over and taking momentum where it is available, industry experts said. This week, B of A cut the government a $425 million check to finally address an unused asset-guarantee that had existed since January to further the purchase of Merrill Lynch & Co.

Unfortunately for B of A, it faces complex issues over which it has little or no control, including: several legal claims by shareholders; state and congressional inquiries; and an uncertain economy.

Jeffery Harte, an analyst at Sandler O'Neill & Partners LP, said resolving the asset-guarantee dispute "was an incremental move" for Bank of America.

For some, the legal morass is the greatest area of concern, given the unpredictability of the judicial process. That was illustrated earlier this month when U.S. District Judge Jed Rakoff tossed out a $33 million settlement between B of A and the Securities and Exchange Commission over claims that B of A did not properly disclose bonuses that were due to Merrill executives after the Jan. 1 takeover. The SEC said this week it would prepare a case; B of A said it would "vigorously" defend itself if the SEC investigation goes to trial.

"Regulatory issues pale in comparison to the potential hurdles of resolving the legal issues," said Ronald Geffner, a former SEC enforcement lawyer who is a partner at the law firm Sadis & Goldberg. "The regulators want the banks to emerge from the retooling in a healthier state. Now that everything is in the public domain, I would find it shocking if the SEC didn't bring actions against individual executives."

Geffner said the same could be said for an ongoing probe by New York Attorney General Andrew Cuomo, who is reportedly considering filing charges that Lewis and B of A's chief financial officer, Joe Price, did not appropriately inform shareholders of Merrill's troubled financial position before the takeover.

A B of A spokesman, Scott Silvestri, said that there was no basis to the Cuomo investigation.

"While investigations by various agencies are a distraction we are focused on running the company and making the necessary changes to prosper in a rapidly changing environment," Silvestri said.

Others see a bigger threat in the political environment in Washington, where lawmakers continue to look at restrictions on compensation and overhauling regulation, among other things. B of A is in a stalemate with the House Committee on Oversight and Government Reform over a request for information about the Merrill deal. The company planned to send Anne Finucane, its marketing and corporate affairs executive, to Washington Tuesday to hold talks in hopes of resolving the dust-up.

"The one thing that keeps me up at night is the politicians," said Kevin Jacques, a former official at the Office of the Comptroller of the Currency who chairs the finance department at Baldwin-Wallace College. "The courts may hit you … but with Congress, there are so many cards on the table that could impact Bank of America and the entire industry for years to come."

To some, the economy may be the most uncontrollable obstacle.

Christopher Whalen, managing director at Lord, Whalen LLC's Institutional Risk Analytics, said B of A may be making more missteps as it "tries to put a good face on a tough situation." Rather, "I worry that the hole in front of us remains pretty deep and raising capital next year is going to be hard," he said. "Litigation is a high-profile annoyance, and what worries me more is Bank of America's potential for posting losses over the next few quarters."

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