BofA Could Get New Government Aid: Report

Updated from Wednesday, Jan. 14

The federal government is close to extending billions in additional aid to Bank of America (BAC) as the company digests its recently closed acquisition of Merrill Lynch, according to a Wall Street Journal report late Wednesday.

BofA and the government began discussing the new aid in December, as the company suggested it may walk away from the deal to acquire Merrill it had agreed to in September, the Journal reported, citing people familiar with the situation. The deal closed Jan. 1.

Details about the new package are still being finalized and are expected to be announced when the Charlotte, N.C., bank reports fourth-quarter results on Tuesday, the paper said.

Bank of America and Treasury spokesmen declined to comment in response to inquiries made by the Associated Press.

Merrill approached BofA about the deal in September, as the struggling New York brokerage watched rival Lehman Brothers forced to file for bankruptcy after coming under assault in the market. The two companies each were among the original nine recipients of preferred equity investments from the Treasury Department's Troubled Assets Relief Program in October, with BofA receiving $15 billion and Merrill receiving $10 billion.

BofA rivals JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) each received $25 billion through the program. The government stepped in with another $20 billion for Citi in September and guaranteed more than $300 billion in risky assets, as the bank teetered in November.

Merrill rivals Goldman Sachs (GS) and Morgan Stanley (MS) each received $10 billion under the original government allocation.

BofA is expected to report a profit of 10 cents a share when Tuesday, according to the consensus analyst estimate by Thomson Reuters.

Shares fell 3.8% to $9.81 in after-hours trading.

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