Washington Bank of America reached an agreement early today for an additional $20 billion in support from the government’s emergency bailout fund, plus guarantees against losses on up to $118 billion in troubled assets.
The agreement was announced shortly after midnight today following marathon negotiations between the bank and federal officials.
It marked the latest effort by the Bush administration to bolster the banking system in the face of the worst financial crisis since the Great Depression.
The $20 billion injection of fresh capital will come from the government’s $700 billion rescue fund and will be similar to assistance provided in November to another troubled bank, Citigroup.
Bank of America will use the money from the rescue fund to help it absorb losses at Merill Lynch.