As part of the emergency plan announced by the Treasury Department, the U.S. Federal Reserve and Federal Deposit Insurance Corp, Treasury will provide the largest U.S. bank by assets with $20 billion in fresh capital from a government bailout fund in exchange for preferred stock.

The government also agreed to share in losses on the troubled assets, which Bank of America took on when it paid an estimated $19.4 billion for Merrill on Jan 1.

(Reporting by Patrick Rucker and Jonathan Stemple; Editing by Ian Geoghegan)