BofA Takes Another $20B Bailout on $10B Merrill Loss
Crippled by unforeseen losses and falling stock price, B of A puts its hand out. Again.
By Clay Dillow, Newser Staff
Posted Jan 16, 2009 7:01 AM CST
In this Nov. 25, 2008 file photo Pedestrians walk through New York's Times Square under a glowing Bank of America marquee.   (AP Photo/Craig Ruttle, file)

(Newser) – Bank of America, sucker-punched by unforeseen losses from its takeover of Merrill Lynch, received another injection of $20 billion from the Treasury, the Wall Street Journal reports, bringing the total cost of BofA’s bailout to $45 billion. BofA’s shares shed 40% of their value in the past seven trading sessions, leaving the bank worth $4.2 billion less than the value of shares originally offered for Merrill.

Merrill described the impending losses as “market related,” and it was hemorrhaging throughout the fourth quarter on scores of credit-related products. When BofA found out, both the Fed and Treasury urged it to complete the deal anyhow, exposing BofA to losses up to $10 billion. The bailout will draw on the first half of the $700 billion TARP fund, and includes a Treasury backstop on $118 billion in BofA assets.

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Guest
Jan 15, 2009 9:42 PM CST
I don't think the quote goes with this article...