Bank of America bail-out agreed

Bank of America receives $20 billion from US government and $118 billion worth of guarantees against bad assets.

The funding will tally the troubled bank's fund that it incurred when it bought Merrill Lynch.

Shares in Bank of America fell 17.5% on Thursday as the banking sector took a hit.

The US Treasury said "Aim of the scheme is to encourage financial market stability and hence to strengthen the economy and protect jobs in America ".The deal guarantees residential and commercial mortgage investments, derivatives and corporate debt.

In return for the aid, the bank must meet strict restrictions on executive pay.

Bank of America's problems hiked when it decided to take over Merrill Lynch, another US banking giant fell victim to the global crisis.

Bank of America underestimated the levels of debt it was taking on as a result of the deal.Bank of America's management just went into an acquisition of Merrill Lynch and now need aid.