I think the "basic story" is pretty simple.
That's exactly what I mean - it actually isn't as simple as what you think happened. Bank of America did not ask for the money from the government.
After Lehman Brothers' collapse, the government decided that it WAS NOT going to let any other major financial institutions fail - not matter what - period. Government thugs (e.g. Paulson) called a meeting with the CEOs of 9 of those institutions (e.g. Citigroup, BoA, Goldman Sachs, JP Morgan) and TOLD them that they were all going to take government loans. The ripples from problems at other institutions (e.g. AIG, Lehman Borthers) were likely to cause liquidity problems with all the big financial insitutions (even if they were in good fiscal health, which many of them were not, due in part to the general economic situation), and the government was not going to allow proliferating institutional collapses. These companies were going to take money to sure up their balance sheets - whether they wanted it or not, and whether they needed it or not. Furthermore, the government didn't want some players taking money while others did not, because the perception that would leave with investors (and the populace at large) might cause increased problems and liquidity issues for those who did take money. So, Paulson handed out pieces of paper and said, right down how much money you are going to take. This was done under the threat that, if they didn't, their government regulators would force them to get the capital anyway.
So, the 'banks' took the loans. Did those loans help their balance sheets at a time when extra extra liquidity was desirable? Of course. But, they didn't ask for them and some didn't want them, because they could see the problems that were likely to attach to taking the loans. Regardless of what they might have done, or what they wanted, they didn't have a choice - the government came in and took interest in these banks, for the good of the nation's economic system overall.
Now, Bank of America had announced its intention to acquire Merrill Lynch, which had been on the verge of collapse. The government desperately wanted BoA to go ahead with that deal, and encouraged BoA to do so - promising to provide any capital needed to backstop them should liquidity problems arise as a result. But, during the normal due dilligence associated with such deals, BoA discovered even deeper financial problems with ML than were expected (as well as other issues). They figured out that it was a terrible deal. So, they decided they didn't want to acquire ML (which is what happens sometimes - they weren't legally committed to the deal). The government said, no - you need to acquire ML - we need you to acquire ML - and by the way, we own part of you now - you took our money, remember? - so do the deal. BoA says, yeah but the shareholders still have to vote on the deal, and this new information we have constitutes a Material Adverse Change (MAC) which, by law, we have to disclose to our shareholders ahead of their vote to approve the deal. The government said, well, no - you aren't going to disclose that stuff - do you understand? Ken Lewis didn't disclose the information, and BoA shareholders voted to acquire ML. Well, it was a horrible deal and wrecked havoc on BoA's balance sheet - and BoA had to get even more money from the government.
Now, Ken Lewis' actions are certainly questionable in this incident - and his day(s) in court over that is coming - but the worse player here is the government. As I've said before, Paulson, at the very least (as the jury is still out on Bernanke's culpability), should be in jail. It is unconscienable what our government did.
So:
The banks were told that they were going to take loans, regarless of whether or not they wanted them.
BoA was told to go through with a deal that it knew was bad - which did a great deal of damage to its financial situation.
Now the banks are being told whether or not they can pay back the loans, and under what conditions they can pay them back - and by the way (not that it changes the propriety of what happened), the government has made significant profits on the the loans that it has allowed to be paid back.
This was a government power play. There were lots of players behaving badly, and BoA can be rightfully criticized for its role, but the truly dispicable behavior here was on the part of the government.
The company I worked for a couple years ago used BOA for payroll, they would not cash my paycheck unless I gave them $5 because I didn't have an account there even though my employer did. Told the lady never mind I would just take it to my bank, she got half pissy because she had already stamped the back figuring i would give up the 5, fricken shysters!