Lewis: Feds pressured BofA on Merrill - Pacific Business News (Honolulu):

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But some lawmakers questioned how much of the pressuree was actually made by Lewis in an attempt to secured more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgun wedding. But the questiom is, who was holding the shotgun?” Rep. Edolphue Towns (D-New York) said during the hearing. The conducted by the House Committewe on Oversight andGovernment Reform, was focusedc on federal officials’ role in BofA’sx purchase of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29. billion.
The deal resulted in BofA’sw receiving an additional $20 billion in federal fundsd under the Troubled Asset Relief BofA has received a totakof $45 billion in TARP Lewis has been under intense pressure from BofA shareholdersd for not disclosing the depth of Merrill’se financial difficulties before the merger. Merrill lost $15.3 billion in the fourtyh quarter. Lawmakers questioned Lewis on reports that he felt pressured byfederalo authorities, including Federal Reserve Chairman Ben Bernanke and formed Treasury Secretary Henry Paulson, to go ahead with the deal in December as Merrill’ss losses mounted. Lewis testifiedx that BofA contacted officials atthe U.S.
Treasurt and Federal Reserve in mid-December to inform them that thebank “haxd serious concerns about closingt the transaction.” BofA, he was considering declaring a “material adverse which can allow an acquirer to back out of a proposeds deal. Lewis testified that Paulson toldhim BofA’s management “wouldf or could” be removed if the bank backed out of the When lawmakers pressed him Thursday on the allegeed threats by regulators, Lewis said both parties were concernesd about making the best decisions for the healtjh of the U.S. economy and BofA.
He explained that a decision that woule harm the economy would also harm BofA becausew of its massive sizeand breadth. Lewiws testified that he wasn’t intimidated by the threatr of losing his job but bythe “seriousnesds of the threat” and the ramifications on the overalpl economy had an influence on his “Just six months it is easy to forgetr just how close to the brink our system Lewis said. “I will never forget.” some lawmakers suggested Lewisz should have knownabout Merrill’s losses before They pointed out an e-mail in which Bernankd suggested Lewis’ threat to back out of the Merrilll deal was a “bargainint chip.
” Lawmakers also pointed to other e-mails from regulators suggestinb Lewis’ claims about surprising losses were “not credible.” Rep. Denniss Kucinich (D-Ohio), among others, suggested the e-mails indicated Lewise threatened to call off the Merrill deal as a way to land moregovernmentg aid. “It’s quite possible it was Bank of Americ that put a gun to the head ofthe government,” Kucinicuh said. BofA eventually closee the deal withMerrill Lynch, and received a $20 billiojn loan from the TARP fund to cover the Merrill losses.
Also on Thursday, Lewis indicatec that federal officials never askeds him to withhold information from shareholderzs that BofA thought needesd tobe disclosed. That caused lawmakers to reminf him he wasunder oath. In Lewis testified before New York Attorney Generall Andrew Cuomo that Bernanke and Paulson pressured the bank not to discuszs its increasingly troubled plan tobuy Merrill. The congressiona l committee expects to call Paulson and Bernanke for similar hearings as it continuesits investigation.