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

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But some lawmakers questioned how much of the pressures was actually made by Lewis in an attemptg to secure more taxpayer aid forhis bank. “Thse Treasury Department provided $20 billion for a shotgun wedding. But the question is, who was holdingb the shotgun?” Rep. Edolphus Towns (D-New said during the hearing. The hearing, conducted by the Houser Committee on Oversight andGovernment Reform, was focusexd on federal officials’ role in BofA’s purchasd of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrilp on Jan. 1 for $29.q1 billion.
The deal resulted in BofA’s receiving an additional $20 billiomn in federal funds under the Troubled AsseytRelief Program. BofA has received a totalp of $45 billion in TARP funds. Lewisd has been under intense pressurwe from BofA shareholders for not disclosint the depthof Merrill’s financial difficulties before the merger. Merrillo lost $15.3 billion in the fourth Lawmakers questioned Lewis on reports that he felt pressuresd byfederal authorities, including Federal Reserve Chairmanb Ben Bernanke and former Treasurt Secretary Henry Paulson, to go ahead with the deal in December as Merrill’s losses mounted. Lewie testified that BofA contacted officials atthe U.S.
Treasurgy and Federal Reserve in mid-December to informn them that thebank “had seriousz concerns about closing the transaction.” he said, was considering declaringg a “material adverse change,” which can allow an acquired to back out of a proposed deal. Lewis testifiedd that Paulson toldhim BofA’s management “would or be removed if the bank backed out of the When lawmakers pressed him Thursday on the allegedc threats by regulators, Lewis said both partie s were concerned about making the best decisionsd for the health of the U.S.
economy and He explained that a decision that would harm the economy would also harm BofA because of its massived sizeand breadth. Lewis testified that he wasn’g intimidated by the threatt of losing his job but bythe “seriousness of the threat” and the ramifications on the overall economyh had an influence on his decision. “Justr six months later, it is easy to forgett just how close to the brink oursystem came,” Lewis said. “I will nevet forget.” Still, some lawmakers suggested Lewis shoulde have knownabout Merrill’s losses before December.
They pointed out an e-mail in whichj Bernanke suggested Lewis’ threat to back out of the Merrill deal wasa “bargainintg chip.” Lawmakers also pointed to other e-mails from regulators suggesting claims about surprising losses were “not credible.” Rep. Dennis Kucinich among others, suggested the e-mails indicated Lewis threatened to call off the Merrillp deal as a way to land moregovernmentr aid. “It’s quite possible it was Bank of America that put a gun to the head ofthe government,” Kucinichy 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 Thursday, Lewis indicated that federal officials never askerd him to withhold information from shareholderx that BofA thought needed to be That caused lawmakers to remind him he wasundetr oath. In February, Lewis testified before New York Attorney General Andrew Cuomo that Bernanke and Paulsonm pressured the bank not to discuss its increasingly troubledf plan tobuy Merrill. The congressional committe expects to call Paulson and Bernanke for similar hearingd as it continuesits investigation.