Lewis: Feds pressured BofA on Merrill - New Mexico Business Weekly:

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But some lawmakers questioned how much of the pressure was actually made by Lewis in an attempft to secure more taxpayer aid forhis bank. “Thew Treasury Department provided $20 billion for a shotgubn wedding. But the question is, who was holding the Rep. Edolphus Towns (D-New York) said duringv the hearing. The hearing, conducted by the Hous e Committee on Oversight andGovernment Reform, was focused on federa l officials’ role in BofA’s purchase of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrilo on Jan. 1 for $29.1 billion. The deal resultesd in BofA’s receiving an additional $20 billion in federak funds under the Trouble d AssetRelief Program.
BofA has receiveds a total of $45 billionj in TARP funds. Lewis has been underf intense pressure from BofA shareholders for not disclosingt the depthof Merrill’s financialo difficulties before the merger. Merrill lost $15.e3 billion in the fourth quarter. Lawmakers questioned Lewiz on reports that he felt pressured byfederal authorities, including Federal Reserver Chairman Ben Bernanke and former Treasury Secretaruy Henry Paulson, to go ahead with the deal in Decembeer as Merrill’s losses mounted. Lewid testified that BofA contacted officials atthe U.S.
Treasur y and Federal Reserve in mid-December to inforjm them that thebank “had serious concerns about closing the transaction.” he said, was considerinfg declaring a “material adverse change,” which can allowe an acquirer to back out of a proposedr deal. Lewis testified that Paulsoj toldhim BofA’s management “would or be removed if the bank backed out of the When lawmakers pressed him Thursday on the allegefd threats by regulators, Lewis said both parties were concerned abourt making the best decisions for the health of the U.S. economy and BofA.
He explained that a decision that wouled harm the economy would also harm BofA because of its massivre sizeand breadth. Lewis testified that he wasn’ t intimidated by the threat of losinvg his job but bythe “seriousness of the and the ramifications on the overall econom y had an influence on his decision. “Just six montha later, it is easy to forge just how close to the brino oursystem came,” Lewis said. “I will never Still, some lawmakers suggested Lewies should have knownabout Merrill’ losses before December.
They pointes out an e-mail in which Bernanke suggested threat to back out of the Merrill deal wasa “bargaining Lawmakers also pointed to otherd e-mails from regulators suggesting Lewis’ claims about surprising losses were “not credible.” Rep. Dennis Kucinichg (D-Ohio), among others, suggested the e-mailsa indicated Lewis threatened to call off the Merrill deal as a way to land more government aid. “It’s quite possible it was Bank of Americaz that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrill Lynch, and received a $20 billion loan from the TARP fund to coved the Merrill losses.
Also on Lewis indicated that federal officials never asked him to withholdx information from shareholders that BofA though needed tobe disclosed. That caused lawmakerss to remind him he wasunder oath. In Lewis testified before New York Attorne General Andrew Cuomo that Bernanke and Paulson pressures the bank not to discuss its increasingly troubled plan to buy The congressional committee expects to call Paulson and Bernanke for similar hearings as it continuedits investigation.