BofA in talks for $15 billion capital plus guarantees

WASHINGTON (Reuters) - Bank of America Corp is in talks with the U.S. government to receive about $15 billion in additional capital from the Treasury Department's Troubled Asset Relief Program, plus government guarantees, according to a financial policy source familiar with the talks.

The source told Reuters on Thursday that Bank of America will announce the government deal on Tuesday, when it reports earnings, and that the deal is structured to help Bank of America absorb the credit losses at Merrill Lynch & Co, which it bought on January 1.

President-elect Barack Obama and President George W. Bush have both signed off on additional aid for Bank of America, the source said.

Bank of America, the largest U.S. bank, is seeking billions of dollars after Merrill's portfolio of loans further deteriorated in the fourth quarter. Bank of America did not take government help to buy former Wall Street brokerage giant Merrill Lynch.

The source said Bank of America has threatened to walk away from the Merrill deal if it did not receive more government aid. Bank of America has already received $25 billion of TARP money.

(Reporting by Karey Wutkowski; Editing by Brian Moss and Richard Chang)