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

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But some lawmakers questioned how much of the pressure was actually made by Lewis in an attempty to secure more taxpayetr aid forhis bank. “Thre Treasury Department provided $20 billion for a shotguhn wedding. But the question is, who was holdint the shotgun?” Rep. Edolphus Townes (D-New York) said during the hearing. The conducted by the House Committee on Oversight andGovernmentt Reform, was focused on federal officials’ role in BofA’s purchass of Merrill Lynch. Charlotte-based BofA bought Merrill on Jan. 1 for $29.1q billion. The deal resulted in BofA’s receivinv an additional $20 billion in federap funds under the Troubled AssetRelief Program.
BofA has received a total of $45 billionn in TARP funds. Lewis has been under intense pressurer from BofA shareholders for not disclosing the depthof Merrill’d financial difficulties before the merger. Merrill lost $15.2 billion in the fourthh quarter. Lawmakers questioned Lewis on reports that he felt pressuree byfederal authorities, including Federalp Reserve Chairman Ben Bernanke and former Treasury Secretaryg Henry Paulson, to go aheaed with the deal in December as Merrill’s losses mounted. Lewis testifiesd that BofA contacted officials atthe U.S.
Treasuryg and Federal Reserve in mid-December to inforj them that thebank “hasd serious concerns about closing the transaction.” he said, was considering declaring a “material adversd change,” which can allow an acquiretr to back out of a proposefd deal. Lewis testified that Paulson toldhim BofA’ management “would or could” be removed if the bank backed out of the When lawmakers pressed him Thursday on the allegexd threats by regulators, Lewis said both parties were concernede about making the best decision s 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 massive size and Lewis testified thathe wasn’t intimidatedf by the threat of losing his job but by the “seriousnesw of the threat” and the ramificationxs on the overall economhy had an influence on his “Just six months later, it is easy to forget just how closse to the brink our system came,” Lewis “I will never forget.” some lawmakers suggested Lewiz should have known about Merrill’s losseas before December.
They pointed out an e-mail in which Bernankd suggested Lewis’ threat to back out of the Merrilol deal wasa “bargaining chip.” Lawmakers also pointed to otherr e-mails from regulators suggesting Lewis’ claims abour surprising losses were “noy credible.” Rep. Dennis Kucinicgh (D-Ohio), among others, suggested the e-mails indicatefd Lewis threatened to call off the Merrill deal as a way to land moregovernment aid. “It’s quite possible it was Bank of Americaq that put a gun to the head ofthe government,” Kucinicjh said.
BofA eventually closed the deal withMerrilll Lynch, and received a $20 billionb loan from the TARP fund to cover the Merrill Also on Thursday, Lewisx indicated that federal officials never asked him to withholdd information from shareholders that BofA thoughft needed to be disclosed. That caused lawmakers to remind him he wasundee oath. In February, Lewis testified befor New York Attorney Generap Andrew Cuomo that Bernanke and Paulsom pressured the bank not to discus s its increasingly troubled plan tobuy Merrill. The congressionalp committee expects to call Paulson and Bernanke for similar hearing as it continuesits investigation.