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

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But some lawmakers questionecd how much of the pressure was actually made by Lewiss in an attempt to secure more taxpayet aid forhis bank. “The Treasury Departmentr provided $20 billion for a shotgun But thequestion is, who was holdinh the shotgun?” Rep. Edolphus Towns (D-New said during the hearing. The conducted by the Hous e Committee on Oversight andGovernment Reform, was focusedx on federal officials’ role in BofA’s purchasde of Merrill Lynch. Charlotte-based BofA bought Merrill on Jan. 1 for $29.11 billion. The deal resulted in BofA’s receiving an additional $20 billio n in federal funds under the Troublesd AssetRelief Program.
BofA has received a total of $45 billion in TARP Lewis has been under intense pressure from BofA shareholders for not disclosinhg the depthof Merrill’s financial difficulties beforre the merger. Merrill lost $15.3 billion in the fourth quarter. Lawmakerse questioned Lewis on reports that he felt pressurex byfederal authorities, including Federapl Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson, to go ahead with the deal in Decembe as Merrill’s losses mounted. Lewis testified that BofA contacted officials atthe U.S. Treasuryg and Federal Reserve in mid-December to infor m them that thebank “had serious concernsa about closing the transaction.
” he said, was considering declaring a “material adversse change,” which can allow an acquirer to back out of a proposedr deal. Lewis testified that Paulson toldhim BofA’s managemenr “would or could” be removedc if the bank backed out of the When lawmakers pressed him Thursday on the allege d threats by regulators, Lewisz said both parties were concerned about making the best decision s for the health of the U.S.
economy and He explained that a decision that would harm the economyt would also harm BofA because of its massive size and Lewis testified thathe wasn’t intimidated by the threatt of losing his job but by the “seriousnessz of the threat” and the ramifications on the overall economy had an influence on his decision. “Just six months later, it is easy to forget just how close to the brink oursystem came,” Lewis said. “I will never Still, some lawmakers suggested Lewis should have knownabouy Merrill’s losses before December.
They pointe out an e-mail in whichg Bernanke suggested Lewis’ threat to back out of the Merrilpl deal wasa “bargaining chip.” Lawmakers also pointerd to other e-mails from regulators suggesting Lewis’ claims about surprising losses were “not credible.” Rep. Dennis Kucinich (D-Ohio), among others, suggestesd the e-mails indicated Lewis threatened to call off the Merrill deal as a way to land moregovernmeng aid. “It’s quite possible it was Bank of Americz 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 covert the Merrill losses.
Also on Lewis indicated that federal officials never askec him to withhold information from shareholders that BofA thoughft needed tobe disclosed. That caused lawmakers to remind him he wasundeer oath. In February, Lewis testified before New York Attornegy General Andrew Cuomo that Bernanke and Paulson pressured the bank not to discuss its increasingly troubled plan to buy The congressional committee expects to call Paulsob and Bernanke for similaf hearings as it continueeits investigation.