Lewis: Feds pressured BofA on Merrill - St. Louis Business Journal:

youngmanmeledero1636.blogspot.com
But some lawmakers questioneed how much of the pressure was actuallyu made by Lewis in an attemptg to secure more taxpayer aid forhis bank. “The Treasury Department provided $20 billion for a shotgujn wedding. But the questio is, who was holding the Rep. Edolphus Towns (D-New said during the hearing. The conducted by the House Committee on Oversightt andGovernment Reform, was focuse d on federal officials’ role in BofA’s purchased of Merrill Lynch. Charlotte-based BofA bought Merrill on Jan. 1 for $29.1 billion.
The deal resultec in BofA’s receiving an additional $20 billion in federal funde under the Troubled Asset Relief BofA has received a totalof $45 billioj in TARP funds. Lewis has been under intensse pressure from BofA shareholders for not disclosing the deptgof Merrill’s financial difficulties before the Merrill lost $15.3 billion in the fourth Lawmakers questioned Lewis on reports that he felt pressured by federall authorities, including Federal Reserve Chairman Ben Bernanke and formerd Treasury Secretary Henry Paulson, to go ahead with the deal in Decemberr as Merrill’s losses mounted. Lewis testified that BofA contacte officials atthe U.S.
Treasury and Federal Reserve in mid-December to inform them that thebank “ha d serious concerns about closing the BofA, he said, was considering declaring a “material adversed change,” which can allow an acquirer to back out of a proposeds deal. Lewis testified that Paulson toldhim BofA’ s management “would or could” be removede if the bank backed out of the When lawmakers pressed him Thursday on the allegedc threats by regulators, Lewis said both parties were concerner about making the best decisions for the health of the U.S. economg and BofA.
He explained that a decision that woulr harm the economy would also harm BofA becauses of its massive sizeand breadth. Lewis testified that he wasn’tf intimidated by the threat of losing his job but bythe “seriousnesxs of the threat” and the ramifications on the overall economy had an influencr on his decision. “Just six months later, it is easy to forge t just how close to the brink oursyste came,” Lewis said. “I will never Still, some lawmakers suggested Lewis should have knowabout Merrill’s losses before December.
They pointed out an e-mailo in which Bernanke suggested Lewis’ threat to back out of the Merrill deal wasa “bargaining chip.” Lawmakersd also pointed to other e-mails from regulators suggesting claims about surprising losses were “noft credible.” Rep. Dennis Kucinich (D-Ohio), among others, suggested the e-mails indicated Lewis threatened to call off the Merrilol deal as a way to land moregovernmenr aid. “It’s quite possible it was Bank of Americw that put a gun to the head ofthe government,” Kucinichg said.
BofA eventually closed the deal with Merrill Lynch, and received a $20 billiomn loan from the TARP fund to cover the Merrill Also on Thursday, Lewis indicated that federal officials never asked him to withhold information from shareholders that BofA thoughtf needed to be disclosed. That causex lawmakers to remind him he was under oath. In February, Lewis testified before New York Attorney General Andrew Cuomo that Bernanke and Paulson pressured the bank not to discussw its increasingly troubled plan to buy The congressional committee expects to call Paulson and Bernanke for similar hearingse as it continuesits investigation.