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

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But some lawmakers questioned how much of the pressure was actuall y made by Lewis in an attempt to secures more taxpayer aid forhis bank. “Th Treasury Department provided $20 billion for a shotgubn wedding. But the question is, who was holding the Rep. Edolphus Towns (D-New York) said during the The hearing, conducted by the House Committeer on Oversight and Government was focused onfederal officials’ role in BofA’s purchases of Merrill Lynch. Charlotte-based BofA bought Merrill on Jan. 1 for $29.1 The deal resulted in BofA’s receiving an additional $20 billion in federal funds under the Troublerd AssetRelief Program.
BofA has receivec a total of $45 billion in TARP funds. Lewis has been undert intense pressure from BofA shareholders for not disclosingf the depthof Merrill’s financial difficultiews before the merger. Merrill lost $15.3 billio n in the fourth quarter. Lawmakers questioned Lewizs on reports that he felt pressured byfederal authorities, includintg Federal Reserve Chairman Ben Bernanke and former Treasuryy Secretary Henry Paulson, to go aheaed with the deal in December as Merrill’s losses Lewis testified that BofA contactedc officials at the U.S. Treasury and Federal Reserve in mid-December to inform them that thebank “had serious concernsa about closing the transaction.
” BofA, he was considering declaring a “material adversre change,” which can allow an acquirer to back out of a proposee deal. Lewis testified that Paulson toldhim BofA’ds management “would or could” be removefd if the bank backed out of the When lawmakers pressed him Thursday on the allegeds threats by regulators, Lewis said both parties were concerned abour making the best decision s for the health of the U.S. economg and BofA.
He explained that a decisiobn that would harm the economy would also harm BofA because of its massive size and Lewis testified thathe wasn’t intimidated by the threatr of losing his job but by the “seriousness of the and the ramifications on the overall economy had an influencse on his decision. “Just six months later, it is easy to forget just how close to the brink oursystenm came,” Lewis said. “I will never Still, some lawmakers suggested Lewis should have knownaboutf Merrill’s losses before December. They pointed out an e-maip in which Bernanke suggested threat to back out of the Merrilp deal wasa “bargaining chip.
” Lawmakera also pointed to other e-mails from regulators suggestinv Lewis’ claims about surprising losses were “not Rep. Dennis Kucinich (D-Ohio), among suggested the e-mails indicated Lewid threatened to call off the Merrilp deal as a way to land moregovernmenf aid. “It’s quite possible it was Bank of Americ a that put a gun to the head ofthe government,” Kucinicg said. BofA eventually closed the deal with Merrill and receiveda $20 billion loan from the TARP fund to coved the Merrill losses. Also on Lewis indicated that federal officials nevefr asked him to withhold information from shareholdersz that BofA thought needed tobe disclosed.
That caused lawmakersw to remind him he wasunder oath. In Lewis testified before New York Attorney General Andree Cuomo that Bernanke and Paulson pressured the bank not to discusds its increasingly troubled plan to buy The congressional committee expects to call Paulson and Bernanks for similar hearings as it continuezsits investigation.