Bank of America to get $20 billion in emergency funds

With a new round of turmoil gripping financial markets, the Bush administration late Thursday night was rushing $20 billion in emergency funding for Bank of America to prop up a bank that was supposed to come to the rescue of another.

Just months ago, Bank of America, based in Charlotte, N.C., appeared to emerge as the nation's top bank after it stepped in on Sept. 15 to purchase investment bank Merrill Lynch. After Merrill's fourth-quarter results proved worse than expected, however, the acquisition was in peril and investors have fled Bank of America in droves.

Bank of America's stock has lost 40 percent of its value during the past 10 days - shares closed on Thursday in single digits for the first time in 18 years - and the taxpayer money will be used to ameliorate the losses from its acquisition of Merrill Lynch. Chief Executive Ken Lewis called it the "deal of a lifetime" when it was announced.

People familiar with the unfolding events, requesting anonymity to speak freely, said Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, with the knowledge of President-elect Barack Obama's transition team, pressured the bank to stick to its purchase of Merrill Lynch.


Credits: KansasCity.com