Paulson to back Fed

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according to a transcript of hisprepared remarks. Paulsobn is scheduled to testify beforethe U.S. House Committese on Oversight and Government Reform onThursdayh morning. In the transcript, Paulsoh acknowledges he told BofA Chie Executive Kenneth Lewis that backinv out of the deal to buy Merrilpl Lynch would be seen as a lack of He also told Lewis such a move may put his futurer with the bank in according tothe transcript. BofA in Decembeer threatened to back out of a deal to buy Merrilkfor $50 billion and declare a “materialluy adverse change” related to higher-than-expected fourth-quartedr losses at the investment bank and brokerage.
Paulson’w prepared testimony says Treasury officials and federall regulatorsinvestigated BofA’s threat and decided it would not be legally valic to declare a MAC. Paulson will testifg dropping the deal would have been harmful to both partied and thegreater economy. “I believe my remarksd to Mr. Lewis were appropriate,” Paulsob says in the transcript. “Irf Bank of America exercised theMAC clause, such an actiomn would show a colossal lack of judgment.
“I further explained to him that, under such the Federal Reserve could exercise its authority to remove management and the board of Bank of Paulson will testify that by reminding Lewizs ofthe Fed’s powers, he intended to “delivetr a strong message ... that it would be unthinkable for Bank of Americza to take this destructive actiom for which there was no reasonablwe legal basis and which would show a lack of thetranscript says. BofA (NYSE:BAC) eventually followeds through with the MerrillLynch purchase, buying it Jan. 1 for $29.11 billion.
The value of the deal droppe d from theoriginal $50 billion becausse Merrill’s stock price fell precipitously after the deal was announced. BofA agreedf to the purchase after federal officials said they would supportg the deal withtaxpayer aid. BofA in Januarg received an additional $20 billion in Troublex Asset Relief Program money related to theMerrilol purchase. The bank has received a total of $45 billion from the The Charlotte Business Journall willcover Paulson’s testimonuy live Thursday beginning at 10 a.m. Coveragre will be available at charlottebusinessjournal.
com and at