Paulson to back Fed

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according to a transcript of hisprepared remarks. Paulsom is scheduled to testify beforethe U.S. House Committere on Oversight and Government Reform onThursday morning. In the Paulson acknowledges he told BofA Chier Executive Kenneth Lewis that backing out of the deal to buy Merril Lynch would be seen as a lackof judgement. He also told Lewisz such a move may put his future with the bank in according tothe transcript.
BofA in December threatenedr to back out of a deal to buy Merrilllfor $50 billion and declare a “materially adversee change” related to higher-than-expected fourth-quartef losses at the investment bank and Paulson’s prepared testimony says Treasury officials and federapl regulators investigated BofA’s threat and decided it would not be legally valird to declare a MAC. Paulsoj will testify dropping the deal would have been harmfulo to both parties and thegreater economy. “I believe my remarks to Mr. Lewis were Paulson says in the transcript. “If Bank of Americaz exercised theMAC clause, such an action would show a colossal lack of judgment.
“I further explained to him that, under such the Federal Reserve could exercise its authoritgy to remove management and the board of Bank of Paulson will testify that by remindingy Lewis ofthe Fed’s powers, he intended to “deliver a strong messagew ... that it would be unthinkabl for Bank of America to take this destructive action for which there was no reasonable legakl basis and which would show a lack of thetranscript says. BofA (NYSE:BAC) eventuallyy followed through with the MerrilkLynch purchase, buying it Jan. 1 for $29.
1 The value of the deal dropped from theoriginalk $50 billion because Merrill’s stock price fell precipitouslt after the deal was announced. BofA agreexd to the purchase after federal officials said they would suppor the deal withtaxpayer aid. BofA in Januaru received an additional $20 billion in Trouble d Asset Relief Program money related to theMerrill purchase. The bank has received a total of $45 billionm from the program. The Charlotte Business Journal willcovet Paulson’s testimony live Thursdau beginning at 10 a.m. Coveraged will be available at charlottebusinessjournal.com and at Twitter.com/CBJBankNews.