Uncle Sam to help BankAm digest Merrill, Countrywide

CHARLOTTE: Bank of America Corp, the biggest US bank by assets, may get more aid from the government to help absorb losses tied to this month���s acquisition of Merrill Lynch & Co, three people familiar with the matter said.

Details are likely to be disclosed on January 20, the people said. That���s when Bank of America may post its first quarterly loss in 17 years as it digests the purchases of Merrill Lynch and Countrywide Financial Corp. The combined company has already received $25 billion from the US.

Bank of America, based in Charlotte, North Carolina, told regulators in December the takeover might be abandoned because of Merrill���s worse-than-expected results, said the people, who declined to be identified because the talks are private. The government insisted the transaction go forward because its collapse would create new turmoil in the financial system, they said.

���Bank of America has all kinds of problems with its acquisitions,��� said Gary Townsend, president of Hill-Townsend Capital LLC in Chevy Chase, Maryland. ���They���ve been so acquisitive, they find themselves with very little in tangible equity.���
Bank of America���s shares lost 66% last year and have declined another 30% since Chief Executive Officer Kenneth Lewis told employees on January 6 that 2008 performance may miss company expectations.

Lewis overreached by rescuing two money-losing companies in six months, including New York-based Merrill Lynch and Calabasas, California-based Countrywide, say analysts including Townsend and Paul Miller of Friedman Billings Ramsey Inc Since becoming CEO in 2001, Lewis has spent $129 billion on acquisitions, including regional lenders FleetBoston Financial Corp and LaSalle Bank, credit-card issuer MBNA and investment manager US Trust Co.

Bank of America on September 15 agreed to buy Merrill Lynch, the world���s largest securities firm, after a weekend of negotiations between Lewis and Merrill CEO John Thain. The $19.4 billion transaction came as Lehman Brothers Holdings Inc sank into bankruptcy, crippled by the frozen credit markets.

���Bank of America took some action to save the system,��� David Hendler, an analyst at CreditSights Inc, said yesterday in a telephone interview. ���Long-term, they are going to be a winner because they are going to get more government support and we are all going to pay for it.���

Discussions for aid started in December and the bank completed the deal January 1, based on assurances of US help. The new aid package is designed to ensure the Merrill Lynch deal gets done, not to save Bank of America from collapse, one person said.