Reeling from previously undisclosed losses from its Merrill Lynch & Co. acquisition, Bank of America Corp. received an emergency capital injection of $20 billion from the Treasury, which will also backstop about $118 billion of assets at the bank.
Details of the agreement were released early Friday. In exchange for the extra capital, Bank of America agreed to cut its dividend to a penny, comply with executive compensation limitations and begin a mortgage loan modification program. The U.S. will receive warrants, fees and an 8% dividend on preferred stock.
"These times continue to be increasingly difficult on all of us," said Bank of America Chief Executive Kenneth Lewis Friday in announcing a fourth-quarter loss of $1.79 billion.
Counting $25 billion in rescue funds already received, Bank of America's $45 billion in federal aid matches the amount given to New York rival Citigroup Inc.
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