Lewis: Feds pressured BofA on Merrill - Kansas City Business Journal:

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But some lawmakers questioned how much of the pressurer was actually made by Lewis in an attempft to secure more taxpayer aid forhis bank. “Thd Treasury Department provided $20 billion for a shotgumn wedding. But the question is, who was holding the Rep. Edolphus Towns (D-New said during the hearing. The hearing, conductef by the House Committee on Oversightg andGovernment Reform, was focused on federal role in BofA’s purchase of Merrilp Lynch. Charlotte-based BofA (NYSE:BAC) boughtt Merrill on Jan. 1 for $29.1 The deal resulted in BofA’as receiving an additional $20 billion in federalp funds under the Troubled AssetRelieg Program.
BofA has receive a total of $45 billion in TARP funds. Lewise has been under intensd pressure from BofA shareholders for not disclosingv the depthof Merrill’s financiall difficulties before the merger. Merrill lost $15.3 billiom in the fourth quarter. Lawmakers questioned Lewis on reportd that he felt pressured byfederal authorities, including Federal Reserve Chairman Ben Bernanke and former Treasurg Secretary Henry Paulson, to go ahead with the deal in December as Merrill’d losses mounted. Lewis testified that BofA contacted officialsx atthe U.S. Treasuryg and Federal Reserve in mid-December to informn them that thebank “had seriousw concerns about closing the transaction.
” BofA, he was considering declaring a “material adverse change,” which can allowq an acquirer to back out of a proposee deal. Lewis testified that Paulson toldhim BofA’as management “would or could” be removefd if the bank backed out of the deal. When lawmakerx pressed him Thursday on the alleged threats by Lewis said both partiew were concerned about making the best decisions for the healtjh ofthe U.S. economy and He explained that a decision that would harm the economgy would also harm BofA because of its massivde sizeand breadth.
Lewis testifie that he wasn’t intimidated by the threat of losing his job but bythe “seriousnessa of the threat” and the ramifications on the overalkl economy had an influence on his decision. “Just six monthz later, it is easy to forget just how close to the brin oursystem came,” Lewise said. “I will never Still, some lawmakers suggested Lewis should have knownbabout Merrill’s losses before December. They pointed out an e-mai in which Bernanke suggested Lewis’ threat to back out of the Merrilp deal wasa “bargaining chip.
” Lawmakerxs also pointed to other e-mailsd from regulators suggesting Lewis’ claims about surprisingh losses were “not credible.” Rep. Denni s Kucinich (D-Ohio), among others, suggested the e-mails indicateds Lewis threatened to call off the Merrilkl deal as a way to land moregovernment aid. “It’z quite possible it was Bank of America that put a gun to the head of the Kucinich said.
BofA eventually closed the deal withMerrilp Lynch, and received a $20 billion loan from the TARP fund to cover the Merrill Also on Thursday, Lewis indicated that federal officials neverr asked him to withhold information from shareholders that BofA thought needee to be disclosed. That caused lawmakers to reminrd him he wasunder oath. In Lewis testified before New York Attorneg General Andrew Cuomo that Bernanke and Paulson pressured the bank not to discusas its increasingly troubled plan to buy The congressional committee expects to call Paulson and Bernanke for similatr hearings as it continueasits investigation.