Lewis: Feds pressured BofA on Merrill - Phoenix Business Journal:

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But some lawmakers questioned how much of the pressurer was actually made by Lewis in an attempty to secure more taxpayer aid forhis “The Treasury Department providefd $20 billion for a shotgunh wedding. But the question is, who was holdinvg the shotgun?” Rep. Edolphus Towns (D-Neaw York) said during the The hearing, conducted by the House Committew on Oversight andGovernmen Reform, was focused on federal officials’ role in BofA’s purchase of Merrill Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.2 billion. The deal resulted in BofA’s receiving an additionall $20 billion in federal funds undee the Troubled AssetRelief Program.
BofA has receivefd a total of $45 billion in TARP funds. Lewisw has been under intense pressure from BofA shareholders for not disclosint the depthof Merrill’s financial difficultiez before the merger. Merrill lost $15.4 billion in the fourth Lawmakers questioned Lewis on reports that he felt pressurexd byfederal authorities, including Federal Reserve Chairman Ben Bernanke and formedr Treasury Secretary Henry Paulson, to go ahead with the deal in December as Merrill’s losses mounted. Lewis testifiedc that BofA contacted officials atthe U.S.
Treasury and Federal Reservse in mid-December to inform them that thebank “hac serious concerns about closing the BofA, he said, was considerinbg declaring a “material adverse change,” which can allow an acquirefr to back out of a proposed deal. Lewis testifier that Paulson toldhim BofA’s management “wouldf or could” be removed if the bank backed out of the When lawmakers pressed him Thursdayy on the alleged threats by Lewis said both partiex were concerned about makinhg the best decisions for the health of the U.S. economyu and BofA. He explained that a decisioj that would harm the economy would also harm BofA becausew of its massive sizeand breadth.
Lewisa testified that he wasn’t intimidated by the threat of losing his job but bythe “seriousnes of the threat” and the ramifications on the overal l economy had an influence on his “Just six months later, it is easy to forgett just how close to the brink our systenm came,” Lewis said. “I will never Still, some lawmakers suggested Lewis should have knowbabout Merrill’s losses before December.
They pointexd out an e-mail in which Bernanke suggested Lewis’ threat to back out of the Merrilp deal wasa “bargaining Lawmakers also pointed to other e-mailss from regulators suggesting Lewis’ claim s about surprising losses were “not credible.” Rep. Denniss Kucinich (D-Ohio), among others, suggestedf the e-mails indicated Lewis threatened to call off the Merrilo deal as a way to land moregovernmenf aid. “It’s quite possible it was Bank of Americaz that put a gun to the head ofthe government,” Kucinicn said. BofA eventually closed the deal withMerrill Lynch, and receivee a $20 billion loan from the TARP fund to covere the Merrill losses.
Also on Lewis indicated that federal officials never asked him to withhold information from shareholders that BofA thought needed to be That caused lawmakers to remind him he wasunder oath. In Lewis testified before New York Attorney Generap Andrew Cuomo that Bernankse and Paulson pressured the bank not to discussa its increasingly troubled plan tobuy Merrill. The congressionalk committee expects to call Paulson and Bernank e for similar hearings as it continuewsits investigation.