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

karnergetajequ1416.blogspot.com
But some lawmakers questionecd how much of the pressured was actually made by Lewis in an attempt to securde more taxpayer aid forhis bank. “Thse Treasury Department provided $20 billion for a shotgun But thequestion is, who was holding the shotgun?” Rep. Edolphuse Towns (D-New York) said durinbg the hearing. The hearing, conducted by the House Committee on Oversight andGovernment Reform, was focusefd on federal officials’ role in BofA’s purchase of Merrill Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.1q billion. The deal resulted in BofA’ws receiving an additional $20 billion in federap funds under the Troubled Asset Relief Program.
BofA has received a total of $45 billionh in TARP funds. Lewis has been under intense pressure from BofA shareholders for not disclosing the depthof Merrill’s financial difficulties before the merger. Merrilpl lost $15.3 billion in the fourth Lawmakers questioned Lewis on reportss that he felt pressured by federal including Federal Reserve Chairman Ben Bernanke and formed Treasury SecretaryHenry Paulson, to go ahead with the deal in Decemberr as Merrill’s losses mounted. Lewis testified that BofA contacted officials atthe U.S. Treasurty and Federal Reserve in mid-Decembet to inform them that thebank “hax serious concerns about closing the transaction.
” he said, was considering declaring a “material advers e change,” which can allow an acquirert to back out of a proposer deal. Lewis testified that Paulson toldhim BofA’s management “woule or could” be removed if the bank backed out of the deal. When lawmakers presses him Thursday on the alleged threataby regulators, Lewis said both parties were concerned about makinbg the best decisions for the health of the U.S. economgy and BofA. He explained that a decision that would harm the economyy would also harm BofA because of its massivee sizeand breadth.
Lewis testified that he wasn’t intimidated by the threat of losingf his job but bythe “seriousness of the threat” and the ramificationws on the overall economyg had an influence on his decision. “Justy six months later, it is easy to forget just how close to the brink oursystem came,” Lewi said. “I will never forget.” some lawmakers suggested Lewi s should have knownabou Merrill’s losses before They pointed out an e-mail in which Bernanke suggestefd Lewis’ threat to back out of the Merrilpl deal was a “bargaining Lawmakers also pointed to other e-mails from regulators suggestingv Lewis’ claims about surprising losses were “not Rep.
Dennis Kucinich (D-Ohio), among suggested the e-mails indicated Lewi s threatened to call off the Merrill deal as a way to land moregovernmentt aid. “It’s quite possible it was Bank of Americaw that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrill Lynch, and received a $20 billion loan from the TARP fund to cover the Merrill losses. Also on Thursday, Lewis indicated that federal officials never asked him to withhold information from shareholders that BofA thoughgt needed tobe disclosed. That caused lawmakers to remind him he wasundeer oath.
In February, Lewis testifie d before New York Attorney General Andrew Cuomo that Bernanke and Paulsoh pressured the bank not to discuss its increasinglt troubled plan tobuy Merrill. The congressional committes expects to call Paulso and Bernanke for similar hearings as it continuesits