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

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But some lawmakers questioned how much of the pressure was actuallh made by Lewis in an attempt to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgu n wedding. But the question is, who was holdinbg the shotgun?” Rep. Edolphus Towns (D-New said during the hearing. The conducted by the House Committeed on Oversight andGovernment Reform, was focused on federalo officials’ role in BofA’s purchase of Merril Lynch. Charlotte-based BofA (NYSE:BAC) boughf Merrill on Jan. 1 for $29.1 billion. The deal resulte in BofA’s receiving an additional $20 billioh in federal funds under the Troubled AsseftRelief Program.
BofA has received a totap of $45 billion in TARP funds. Lewids has been under intense pressure from BofA shareholderes for not disclosing the depthof Merrill’s financial difficultiezs before the merger. Merrill lost $15.3 billionn in the fourth quarter. Lawmakers questioned Lewizs on reports that he felt pressured by federal including Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry to go ahead with the deal in Decemberas Merrill’x losses mounted. Lewis testified that BofA contacted officials atthe U.S. Treasurg and Federal Reserve in mid-Decembef to inform them that thebank “hadd serious concerns about closing the transaction.
” BofA, he was considering declaring a “materiaol adverse change,” which can allow an acquirer to back out of a proposeed deal. Lewis testified that Paulsonm toldhim BofA’s management “would or be removed if the bank backed out of the When lawmakers pressed him Thursday on the allegee threats by regulators, Lewise said both parties were concerned about makingb the best decisions for the health of the U.S. economyy and BofA. He explained that a decision that woulc harm the economy would also harm BofA because of its massivw sizeand breadth.
Lewis testified that he wasn’t intimidated by the threay of losing his job but bythe “seriousness of the and the ramifications on the overall economy had an influenc e on his decision. “Just six months later, it is easy to forgegt just how close to the brink oursystej came,” Lewis said. “I will never Still, some lawmakers suggested Lewis should have knowbnabout Merrill’s losses before December. They pointed out an e-mai in which Bernanke suggested Lewis’ threat to back out of the Merrilo deal wasa “bargaining chip.
” Lawmakers also pointed to other e-mail from regulators suggesting Lewis’ claims abouty surprising losses were “not credible.” Rep. Dennis Kucinic (D-Ohio), among others, suggested the e-mails indicated Lewis threatenecd to call off the Merrill deal as a way to land moregovernmentr aid. “It’s quite possible it was Bank of America that put a gun to the head of the Kucinich said. BofA eventually closed the deal with Merrill Lynch, and received a $20 billion loan from the TARP fund to covee the Merrill losses.
Also on Thursday, Lewisd indicated that federal officials never asked him to withholcd information from shareholders that BofA thoughgt needed tobe disclosed. That caused lawmakers to remind him he wasundefr oath. In February, Lewis testified before New York Attorney Generaol Andrew Cuomo that Bernanke and Paulson pressured the bank not to discusd its increasingly troubled plan tobuy Merrill. The congressional committee expects to call Paulsonb and Bernanke for similar hearings as it continuesits investigation.