updated 9/21/2009 5:44:14 PM ET 2009-09-21T21:44:14

Bank of America has reached an agreement to pay the government $425 million to end a loss-sharing arrangement involving risky assets from the company's takeover of Merrill Lynch.

The fee is being paid to the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp.

Bank of America is paying the fee to get out of an arrangement in which the government had promised to cover $118 billion in risky assets acquired in the Merrill takeover. The arrangement was never used, but the government has argued that the bank benefited from the promise of protection.

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