Lewis: Feds pressured BofA on Merrill - South Florida Business Journal:

eragywaqer.wordpress.com
But some lawmakers questioned how much of the pressuree was actually made by Lewisz in an attempt to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgu wedding. But the question is, who was holdinh the shotgun?” Rep. Edolphus Towns (D-New York) said duringt the hearing. The conducted by the House Committee on Oversight and Government was focused onfederal officials’ role in BofA’a purchase of Merrill Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.1 The deal resulted in BofA’s receivintg an additional $20 billion in federal fundas under the Troubled AssetRelief Program.
BofA has receivee a total of $45 billion in TARP Lewis has been under intense pressure from BofA shareholdere for not disclosing the depthof Merrill’s financiap difficulties before the merger. Merrill lost $15.3 billion in the fourth quarter. Lawmakerx questioned Lewis on reports that he felt pressuredc byfederal authorities, including Federal Reserver Chairman Ben Bernanke and forme r Treasury Secretary Henry Paulson, to go ahead with the deal in December as Merrill’s losses mounted. Lewis testified that BofA contactedx officials atthe U.S. Treasury and Federall Reserve in mid-December to inform them that thebank “had seriou concerns about closing the transaction.
” he said, was considering declarinb a “material adverse change,” which can allow an acquirer to back out of a proposesd deal. Lewis testified that Paulsomn toldhim BofA’s management “wouldc or could” be removed if the bank backerd out of the deal. When lawmakers pressesd him Thursday on the allegef threatsby regulators, Lewis said both parties were concernec about making the best decisions for the health of the U.S. economy and He explained that a decision that would harm the economyu would also harm BofA because of its massive sizeand breadth.
Lewiz testified that he wasn’t intimidated by the threart of losing his job but bythe “seriousness of the and the ramifications on the overall economy had an influence on his “Just six months later, it is easy to forget just how clos e to the brink our system Lewis said. “I will never Still, some lawmakers suggestes Lewis should have knownabout Merrill’s losse s before December. They pointefd out an e-mail in which Bernanke suggesteds Lewis’ threat to back out of the Merrill deal wasa “bargaininv chip.” Lawmakers also pointed to other e-mails from regulators suggestingf Lewis’ claims about surprising losses were “nof credible.
” Rep. Dennis Kucinich (D-Ohio), among others, suggestede the e-mails indicated Lewis threatened to call off the Merril deal as a way to land moregovernmenft aid. “It’s quite possible it was Bank of Americsa that put a gun to the head of the Kucinich said. BofA eventually closesd the deal withMerrill Lynch, and receivexd a $20 billion loan from the TARP fund to coverd the Merrill losses. Also on Lewis indicated that federal officials never asked him to withhold information from shareholders that BofA thought needed tobe disclosed. That causedr lawmakers to remind him he wasunderr oath.
In February, Lewis testifiex before New York Attorney General Andrew Cuoml that Bernanke and Paulson pressure the bank not to discussz its increasingly troubled plan to buy The congressional committee expects to call Paulsob and Bernanke for simila r hearings as it continueswits investigation.