US official: BofA aid diverted from TARP first half

Published: 16 Jan 2009 01:55:46 PST

WASHINGTON, Jan 16 - The $20 billion in additional aid for Bank of America Corp will be diverted from the first half of a $700 billion financial rescue fund, a U.S. government official said on Friday.

The funds were previously allocated for other uses, but were not yet spent, the official told reporters on a conference call after the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp announced a deal to inject $20 billion in new capital into Bank of America and backstop a $118 billion portfolio of assets.

The "overwhelming majority" of the asset pool subject to the guarantee are Merrill Lynch mortgage related assets, the official said.