Bank of America Gets $138 Billion Lifeline for Merrill Losses
Bank of America has received bailout money from the government to fund its acquisition of Merrill Lynch. The government said the move was necessary to prevent the global financial crisis from deepending.
The U.S. government agreed to invest $20 billion more in Bank of America and guarantee $118 billion of assets “as part of its commitment to support financial-market stability,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement shortly after midnight in Washington.
The bailout may increase pressure on Chief Executive Officer Kenneth D. Lewis, who reports fourth-quarter results today, to defend his decision to buy the ailing Merrill. Lewis overreached by rescuing two money-losing firms in six months, including New York-based Merrill and Calabasas, California-based Countrywide Financial Corp., said analysts including Paul Miller of Friedman Billings Ramsey Group Inc.