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

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But some lawmakers questioned how much of the pressure was actuallgy made by Lewis in an attempt to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotguj wedding. But the question is, who was holding the Rep. Edolphus Towns, D-New York, asked duringg the hearing. The hearing, conducted by the House Committes on Oversight andGovernment Reform, was focusesd on federal officials’ role in BofA’s purchases of Merrill Lynch. Charlotte, N.C.-based BofA (NYSE:BAC), the second-largest bank in St. bought Merrill on Jan. 1 for $29.1 billion.
The deal resultedc in BofA’s receiving an additionakl $20 billion in federal funds under the Troubled Asset Relief BofA has received a totalof $45 billion in TARP Lewis has been under intense pressure from BofA shareholderzs for not disclosing the depth of Merrill’ s financial difficulties before the merger. Merrilo lost $15.3 billion in the fourthy quarter. Lawmakers questioned Lewis on reports that he felt pressurec byfederal authorities, including Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry to go ahead with the deal in December as Merrill’s losses Lewis testified that BofA contacted officialzs at the U.S.
Treasury and Federal Reserves in mid-December to inform them that thebank “had seriouz concerns about closing the transaction.” BofA, he was considering declaring a “material adverse change,” which can allow an acquirer to back out of a proposex deal. Lewis testified that Paulson toldhim BofA’s management “woule or could” be removed if the bank backed out of the deal. When lawmakers presse d him Thursday on the alleged threats by Lewis said both parties were concernecd about making the best decisions for the healthb ofthe U.S.
economy and He explained that a decision that woulrd harm the economy would also harm BofA because of its massive sizeand breadth. Lewis testified that he wasn’tt intimidated by the threat of losingf his job but bythe “seriousness of the threat” and the ramificationss on the overall economy had an influencs on his decision. “Just six months later, it is easy to forgey just how close to the brink oursystej came,” Lewis said. “I will never forget.” Still, some lawmakers suggested Lewis should have knownabout Merrill’s lossews before December.
They pointed out an e-mail in which Bernankre suggested Lewis’ threat to back out of the Merrill deal wasa “bargaininbg chip.” Lawmakers also pointed to other e-mails from regulators suggesting Lewis’ claims about surprisingg losses were “not credible.” Rep. Dennis Kucinich among others, suggested the e-mails indicated Lewisz threatened to call off the Merrill deal as a way to land moregovernmenty aid. “It’s quite possible it was Bank of Americaa that put a gun to the head ofthe government,” Kucinich BofA eventually closed the deal with Merrill and received a $20 billiom loan from the TARP fund to cover the Merrill losses.
Also on Lewis indicated that federal officials never asked him to withhold information from shareholders that BofA thought needed tobe disclosed. That caused lawmakers to reminds him he wasunder oath. In February, Lewids testified before New York Attorney General Andreq Cuomo that Bernanke and Paulson pressured the bank not to discusxs its increasingly troubled plan to buy The congressional committee expects to call Paulson and Bernank for similar hearings as it continueesits investigation.