NEW YORK — John Thain resigned under pressure from Bank of America on Thursday after reports he rushed out billions of dollars in bonuses to Merrill Lynch employees in his final days as CEO there, while the brokerage was suffering huge losses and just before Bank of America took it over.

The bonuses were paid before Bank of America's acquisition of Merrill became final on Jan. 1, and while Bank of America was privately telling the government that Merrill was losing so much money that the deal might fall through unless it could get more federal bailout money.

Bank of America later received an additional $20 billion from the government, in part to offset the unexpected Merrill losses. The brokerage lost $15 billion in the fourth quarter and more than $27 billion for the year.

The bonuses, typically paid in January, were instead given in December and totaled $3 billion to $4 billion, the Financial Times reported Thursday. Bank of America would not confirm the size of the bonuses.

Scott Silvestri, a Bank of America spokesman, noted that Merrill was still operating as an independent company at the time the bonuses were paid. Had Thain not acted early, it would have been up to Bank of America to pay or reduce the bonuses later.

The government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under, setting off the most intense period of the financial crisis.

The government also promised last week to guarantee about $97 billion in losses on Bank of America's troubled assets, most of it coming from Merrill Lynch.

In 2007, 53-year-old Thain topped the list of highest-paid CEOs in American business, with a compensation package valued at $83 million, according to an Associated Press analysis.

New York Attorney General Andrew Cuomo has opened an investigation into the bonuses, a person familiar with the probe told The Associated Press on Thursday. The person spoke on condition of anonymity because the investigation is ongoing.

More bank aid on the way

The government said Thursday it has distributed an additional $1.5 billion to 39 banks nationwide as part of the $700 billion financial rescue program.

The latest capital infusions, which were made on Jan. 16, bring the total amount used to buy bank stock to $193.8 billion. Nearly 300 banks in 43 states and Puerto Rico have received support through the program.

The outgoing Bush administration also spent $1.5 billion to bolster Chrysler's auto financing arm.

Those payments brought the Bush administration's total bailout program spending to $299.6 billion.

The latest injections of money ranged from $400 million provided to the First BanCorp of San Juan, Puerto Rico, to $1.75 million for the Community Bank of the Bay in Oakland, Calif.

The government is required to publicly disclose its disbursements through the $700 billion rescue program within two business days after the payments are made.




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