Part of multi-agency government guarantee of approximately $118 billion in Bank of America assets, most of which it acquired through the purchase of investment bank Merrill Lynch.  Under the terms of the agreement, Bank of America is responsible for the first $10 billion in losses on the assets.  Remaining losses are divided 90/10 between the government and Bank of America.  For the next $10 billion in losses, the Treasury and FDIC split the government’s 90% share.  90% of the remaining losses are covered by the Fed through a non-recourse loan.

See the companion guarantees of Bank of America assets by the Treasury and the FDIC.