Feds to Give BoA Billions More for Merrill Deal

By John Johnson,  Newser Staff
Posted Jan 14, 2009 8:30 PM CST
In this Nov. 25, 2008 file photo Pedestrians walk through New York's Times Square under a glowing Bank of America marquee. China Construction Bank said Wednesday Jan. 7, 2009 that Bank of America is selling...   (AP Photo/Craig Ruttle, file)

(Newser) – The feds will have to pony up billions of dollars more to help Bank of America close its deal to purchase Merrill Lynch, the Wall Street Journal reports. BoA already has received $25 billion, but Merrill's massive fourth-quarter losses have thrown a wrench in the acquisition. Henry Paulson is a driving force behind the negotiations with BoA, because he fears the deal could fall through and wreak yet more havoc on the financial industry.

The exact figure of the new aid, which will come from TARP funds, is still under negotiation. BoA also is expected to be given a cap on how much of the ailing security firm's losses it will have to absorb because of bad assets. The development comes as Congress is deciding whether to release the second half of the $700 billion TARP bailout.