If you’ve been following Bank of America’s contradictory statements about whether it tracks its spending of $45 billion in taxpayer dollars, Bloomberg has a story today that might interest you. The gist is that the Security and Exchange Commission’s internal watchdog is examining the way the commission is handling investigations of banks, including Bank of America, that have received bailout funds.

Some background:

As we reported last month, Bank of America, the nation’s largest bank, has told Congress and the Treasury Department that it can’t track how it spends the taxpayer funds, received as part of the government’s $700 billion bailout program. But the bank’s lawyers recently contradicted those earlier claims, promising a federal judge in Manhattan last month that they would not use those funds to pay a $33 million settlement to the SEC.

The judge rejected the settlement because he said it was too small a punishment for charges that the bank misled investors about bonuses paid to Merrill Lynch executives. In response, Bank of America and the SEC defended the fine in separate filings this week in federal court. The SEC said the fine was "fair, reasonable, adequate and in the public interest." The bank said it “would not unfairly harm innocent shareholders.”

Did the fact that the American taxpayer is one of those shareholders deter the SEC from seeking a heftier fine?

Now, according to Bloomberg, the commission’s inspector general is investigating whether the amount of taxpayer funds a bank has received is influencing the amount the SEC will fine a bank for misconduct. 

Representative Elijah Cummings  (D-Md.) requested the investigation and asked the SEC’s inspector general to specifically examine the $33 million penalty against Bank of America, according to Bloomberg.

When there's more, we’ll update the story.