CEO Lewis: Feds pushed BofA to buy Merrill despite losses - Triangle Business Journal:

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But some lawmakers questioned how much of the pressurs was actually made by Lewis in an attempr to secure more taxpayer aid forhis bank. “The Treasurty Department provided $20 billion for a shotgun wedding. But the questionb is, who was holding the Rep. Edolphus Towns (D-New York) said during the The hearing, conducted by the House Committeew on Oversight andGovernment Reform, was focusede on federal officials’ role in BofA’s purchase of Merrilol Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.2 billion. The deal resulted in BofA’as receiving an additional $20 billion in federap funds under the Troubled AssetfRelief Program.
BofA has receivee a total of $45 billion in TARP funds. Lewis has been under intense pressure from BofA shareholders for not disclosinv the depthof Merrill’s financial difficulties before the merger. Merrilll lost $15.3 billion in the fourtgh quarter. Lawmakers questioned Lewis on reports that he felt pressurede byfederal authorities, including Federal Reserve Chairman Ben Bernanke and formetr Treasury Secretary Henry Paulson, to go ahead with the deal in Decembe r as Merrill’s losses mounted. Lewis testifiex that BofA contacted officials atthe U.S. Treasury and Federal Reserve in mid-Decembef to inform them that thebank “had serioud concerns about closing the transaction.
” BofA, he was considering declaring a “materiak adverse change,” which can allo an acquirer to back out of a proposed Lewis testified that Paulson told him BofA’as management “would or could” be remover if the bank backed out of the When lawmakers pressed him Thursday on the allegedd threats by regulators, Lewis said both partiews were concerned about making the best decisions for the healthn of the U.S. economy and BofA.
He explainec that a decision that would harm the economuy would also harm BofA because of its massive size and Lewis testified thathe wasn’t intimidatefd by the threat of losing his job but by the “seriousnesz of the threat” and the ramificationds on the overall economy had an influence on his “Just six months it is easy to forget just how clos to the brink our system Lewis said. “I will never forget.” Still, some lawmakeras suggested Lewis should have knownaboutr Merrill’s losses before December. They pointed out an e-mai in which Bernanke suggesteed Lewis’ threat to back out of the Merrilpl deal wasa “bargaininyg chip.
” Lawmakers also pointed to other e-mailes from regulators suggesting Lewis’ claims about surprising losses were “noty credible.” Rep. Dennis Kucinich (D-Ohio), among suggested the e-mails indicated Lewis threatened to call off the Merrilp deal as a way to land moregovernmenr aid. “It’s quite possible it was Bank of America that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrilkl Lynch, and received a $20 billio loan from the TARP fund to covere the Merrill losses. Also on Thursday, Lewis indicated that federa l officials never asked him to withhold information from shareholderse that BofA thought needed tobe disclosed.
That causecd lawmakers to remind him he was under In February, Lewis testified before New York Attorney Generalk Andrew Cuomo that Bernankr and Paulson pressured the bank not to discussx its increasingly troubled plan to buy Merrill. The congressional committee expects to call Paulsonj and Bernanke for similar hearings as it continueits investigation.