Bank of America to receive additional $20 billion - International Herald Tribune

But the need for fresh government support to grapple with the newly revealed losses at Merrill Lynch, the brokerage firm he snapped up in a rapid-fire arrangement at the height of the financial crisis in September, raises questions about whether the bank has gone a deal too far.

Two weeks after closing its purchase of Merrill Lynch at the urging of U.S. regulators, the government cemented a deal at midnight Thursday to supply Bank of America with a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets, according to people involved in the transaction.

The bank had been pressing the government for help after it was surprised to learn that Merrill would be taking a fourth-quarter write-down of $15 billion to $20 billion, according to two people who have been briefed on the situation, in addition to Bank of America’s rising consumer loan losses.

This can surely be no surprise. Merril was a toxic mess, and everybody knew it, so I can’t imagine that BofA agreed to swallow the poisoned pill without ironclad guarantees from the governments that the taxpayers would absorb any losses from the takeover.

The only question ever involved was just how big those losses would be. And thanks to Ben Bernanke’s policy of absolute secrecy, we have no way of knowing just what has been done here, and, more important, elsewhere.

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