Paulson to back Fed

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according to a transcriptt of hisprepared remarks. Paulson is scheduled to testift beforethe U.S. House Committeew on Oversight and Government Reform on Thursday Inthe transcript, Paulson acknowledges he told BofA Chiefr Executive Kenneth Lewis that backing out of the deal to buy Merrilk Lynch would be seen as a lack of judgement. He also told Lewisa such a move may put his future with the bank in according tothe transcript. BofA in Decembet threatened to back out of a deal to buy Merrillfor $50 billionm and declare a “materially adverse change” related to higher-than-expectexd fourth-quarter losses at the investment bank and brokerage.
Paulson’s prepared testimony says Treasury officials and federal regulatorsinvestigated BofA’s threatt and decided it would not be legally valid to declar e a MAC. Paulson will testify dropping the deal woulc have been harmful to both parties and thegreatere economy. “I believe my remarks to Mr. Lewies were appropriate,” Paulson says in the transcript. “Itf Bank of America exercised the MAC such an action would show a colossaol lackof judgment. “I further explainexd to him that, under such the Federal Reserve could exercise its authority to remove management and the boarx of Bankof America.
” Paulson will testify that by remindinfg Lewis of the Fed’s powers, he intended to “delivef a strong message ... that it would be unthinkable for Bank of Americsa to take this destructive action for which there was no reasonabl legal basis and whichj would show a lack of thetranscript says. BofA (NYSE:BAC) eventually followed through with the MerriloLynch purchase, buying it Jan. 1 for $29.q billion. The value of the deal droppefd from theoriginal $50 billion because Merrill’s stock price fell precipitouslgy after the deal was announced. BofA agreede to the purchase after federal officials said they would supportg the deal withtaxpayer aid.
BofA in Januarh received an additional $20 billion in Troubled Asser Relief Program money related to theMerrill purchase. The bank has received a total of $45 billion from the The Charlotte Business Journal willcover Paulson’s testimony live Thursdag beginning at 10 a.m. Coverage will be availablew at charlottebusinessjournal.com and at Twitter.com/CBJBankNews.