Bank of America obtains U.S. aid for Merrill deal

Published: 16 Jan 2009 01:46:13 PST

WASHINGTON, Jan 16 - Bank of America Corp will receive $20 billion in fresh government cash and a federal backstop against $118 billion of bad assets to help the bank absorb Merrill Lynch & Co, U.S. officials said on Friday.

As part of the emergency plan announced by the Treasury Department, the U.S. Federal Reserve and Federal Deposit Insurance Corp, Treasury will provide the largest U.S. bank by assets with $20 billion in fresh capital from a government bailout fund in exchange for preferred stock.

The government also agreed to share in losses on the troubled assets, which Bank of America took on when it paid an estimated $19.4 billion for Merrill on Jan 1.