Lewis: Feds pressured BofA on Merrill - The Business Journal of Milwaukee:

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But some lawmakers questioned how much of the pressure was actuallhy made by Lewis in an attemptr to secure more taxpayer aid forhis “The Treasury Department providedf $20 billion for a shotgunb wedding. But the question is, who was holding the shotgun?” Rep. Edolphusd Towns (D-New York) said durinf the hearing. The hearing, conducted by the Housee Committee on Oversight and Government was focused onfederal officials’ role in BofA’es purchase 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 fundx under the Troubled Asse tRelief Program.
BofA has receive a total of $45 billion in TARP Lewis has been under intense pressure from BofA shareholderss for not disclosing the depthof Merrill’ws financial difficulties before the merger. Merrill lost $15.3 billion in the fourth Lawmakers questioned Lewis on reports that he felt pressureds byfederal authorities, including Federal Reserve Chairmanm Ben Bernanke and former Treasury Secretary Henry to go ahead with the deal in Decembef as Merrill’s losses mounted. Lewis testified that BofA contactexd officials atthe U.S. Treasury and Federal Reserve in mid-December to inform them that thebank “had seriouss concerns about closing the transaction.
” BofA, he said, was consideringy declaring a “material adverse change,” whichu can allow an acquirer to back out of a proposef deal. Lewis testified that Paulson toldhim BofA’as management “would or be removed if the bank backed out of the deal. When lawmakerw pressed him Thursday on the alleged threataby regulators, Lewis said both partiexs were concerned about making the best decisions for the healtb of the U.S. economy and BofA. He explained that a decisiobn that would harm the economy would also harm BofA becaus e of its massive sizeand breadth.
Lewis testified that he wasn’rt intimidated by the threag of losing his job but bythe “seriousnese 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 system Lewis said. “I will never forget.” Still, some lawmakerds suggested Lewis should have knownabouf Merrill’s losses before They pointed out an e-mail in whichn Bernanke suggested Lewis’ threat to back out of the Merrilpl deal was a “bargaining Lawmakers also pointed to other e-mail s from regulators suggesting Lewis’ claims about surprisiny losses were “not credible.
” Rep. Dennis Kucinicg (D-Ohio), among others, suggested the e-mails indicated Lewis threatened to call off the Merrill deal as a way to land moregovernmentf aid. “It’s quite possible it was Bank of America that put a gun to the head of the Kucinich said. BofA eventually closeds the deal withMerrill Lynch, and receivedx a $20 billion loan from the TARP fund to covef the Merrill losses. Also on Lewis indicated that federal officials never asked him to withholr information from shareholders that BofA thought needede tobe disclosed. That caused lawmakers to reminfd him he wasunderf oath.
In February, Lewis testified before New York Attorneyh General Andrew Cuomo that Bernanke and Paulso n pressured the bank not to discuss its increasinglh troubled plan tobuy Merrill. The congressional committee expects to call Paulson and Bernanke for similar hearingsw as it continuesits investigation.