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.

(Reporting by Karey Wutkowski; editing by Richard Chang)