U.S. regulators seek fees from BofA-source

(Updates with source confirmation)

WASHINGTON, July 13 (Reuters) - U.S. regulators believe Bank of America should pay fees for having the government backstop assets it acquired when it bought Merrill Lynch, even though the guarantees were never called upon, a source familiar with the talks said on Monday.

Regulators are in talks with Bank of America (BAC.N) over what would be a fair amount to pay for benefits the bank received in January as it struggled after its purchase of Merrill, the source said.

When Bank of America announced the agreement in January, it said it would pay a premium of 3.4 percent of assets backed by government guarantees. Troubled assets covered under the program totaled $118 billion, potentially leaving Bank of America with an approximately $4 billion bill.

But regulators expect the bank to pay far less than that.

Bank of America has for months said the agreement was never signed and that it no longer needs it. However, regulators believe the bank received some benefit from the backstop and should pay something for it, the source said.

Bank of America declined to comment.

A Treasury Department official said U.S. officials were still working out the details of the program with the bank, but offered no further details.

Bloomberg reported earlier on Monday that Bank of America believes it owes the Treasury nothing because the agreement was never signed and the funds were never used. (Reporting by Mark Felsenthal; Editing by Dan Grebler)