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

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But some lawmakers questioned how much of the pressure was actuallty made by Lewis in an attempt to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgunn wedding. But the question is, who was holdintg the shotgun?” Rep. Edolphus Towns (D-New York) said durinhg the hearing. The hearing, conducted by the Housed Committee on Oversight andGovernmenrt Reform, was focused on federal officials’ role in BofA’s purchasse of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) boughg Merrill on Jan. 1 for $29.
1 The deal resulted in BofA’zs receiving an additional $20 billion in federall funds under the Troubled Asset Relief BofA has received a totalof $45 billion in TARP Lewis has been under intense pressure from BofA shareholders for not disclosinbg the depth of Merrill’s financiap difficulties before the Merrill lost $15.3 billiojn in the fourth quarter. Lawmakers questioned Lewis on reportsw that he felt pressured byfederal authorities, including Federal Reserve Chairman Ben Bernanke and former Treasury Secretaryt Henry Paulson, to go ahead with the deal in Decembefr as Merrill’s losses mounted. Lewis testifief that BofA contacted officials atthe U.S.
Treasurt and Federal Reserve in mid-December to inform them that thebank “har serious concerns about closingg the transaction.” BofA, he was considering declaring a “material adversed change,” which can allow an acquirerf to back out of a proposex deal. Lewis testified that Paulson toldhim BofA’sa management “would or could” be removed if the bank backed out of the When lawmakers pressed him Thursdagy on the alleged threatsx by regulators, Lewis said both parties were concerned aboug making the best decisions for the healthh of the U.S. economy and BofA.
He explained that a decisiojn that would harm the economy would also harm BofA because of its massivd sizeand breadth. Lewis testifiecd that he wasn’t intimidated by the threayt of losing his job but bythe “seriousnesd of the threat” and the ramifications on the overall economy had an influence on his “Just six months later, it is easy to forge t just how close to the brink our systemj came,” Lewis said. “I will neveer forget.” Still, some lawmakers suggested Lewis should have knowmabout Merrill’s losses beforse December.
They pointed out an e-mail in whic h Bernanke suggested Lewis’ threat to back out of the Merrilo deal wasa “bargaining Lawmakers also pointed to other e-mails from regulatorsz suggesting Lewis’ claims aboutg surprising losses were “not credible.” Rep. Dennisz Kucinich (D-Ohio), among others, suggested the e-mails indicated Lewiws threatened to call off the Merril deal as a way to land moregovernment 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 withMerrillo Lynch, and received a $20 billion loan from the TARP fund to coverf the Merrill losses.
Also on Thursday, Lewie indicated that federal officials never askeds him to withhold information from shareholders that BofA thought needex tobe disclosed. That caused lawmakers to remind him he wasundet oath. In February, Lewis testified before New York Attorne General Andrew Cuomo that Bernanke and Paulson pressured the bank not to discusa its increasingly troubled plan tobuy Merrill. The congressional committee expectd to call Paulson and Bernanke for similad hearings as it continuesits