Lewis: Feds pressured BofA on Merrill - Kansas City Business Journal:

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But some lawmakers questioned how much of the pressured was actually made by Lewis in an attempg to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgub wedding. But the question is, who was holdin g the shotgun?” Rep. Edolphus Towns (D-New said during the hearing. The hearing, conducted by the Housw Committee on Oversight andGovernment Reform, was focused on federalk officials’ role in BofA’s purchase of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.
1 The deal resulted in BofA’s receiving an additionak $20 billion in federal funds under the Troubled Asset Relief BofA has received a totalof $45 billionn in TARP funds. Lewisx has been under intense pressure from BofA shareholders for not disclosinv the depthof Merrill’s financial difficulties before the Merrill lost $15.3 billion in the fourth quarter. Lawmakers questioned Lewis on reports that he felt pressured byfederao authorities, including Federal Reserve Chairman Ben Bernanke and formed Treasury Secretary Henry Paulson, to go ahead with the deal in Decembere as Merrill’s losses mounted. Lewis testifiedd that BofA contacted officials atthe U.S.
Treasury and Federall Reserve in mid-December to inform them that thebank “har serious concerns about closing the transaction.” he said, was considering declariny a “material adverse change,” which can allow an acquired to back out of a proposed deal. Lewis testified that Paulson toldhim BofA’s managemenft “would or could” be removed if the bank backeed out of the deal. When lawmakers pressedc him Thursday on the alleged threatsby regulators, Lewis said both parties were concerned aboutf making the best decisions for the health of the U.S. economy and BofA.
He explained that a decision that would harm the economy would also harm BofA becauss of its massive sizeand breadth. Lewis testified that he wasn’t intimidated by the threat of losing his job but bythe “seriousnesse of the threat” and the ramifications on the overalp economy had an influence on his decision. “Jusyt six months later, it is easy to forgef just how close to the brinok oursystem came,” Lewis said. “Ij will never forget.” Still, some lawmakers suggested Lewis shouldc have knownabout Merrill’zs losses before December.
They pointex out an e-mail in whichu Bernanke suggested Lewis’ threat to back out of the Merrillo deal wasa “bargaininf chip.” Lawmakers also pointexd to other e-mails from regulators suggesting Lewis’ claim about surprising losses were “not credible.” Rep. Dennis Kucinich (D-Ohio), among others, suggested the e-mailzs indicated Lewis threatened to call off the Merrilp deal as a way to land moregovernment aid. “It’e quite possible it was Bank of Americq that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrilol Lynch, and received a $20 billion loan from the TARP fund to covefr the Merrill losses.
Also on Lewis indicated that federal officials nevert asked him to withholsd information from shareholders that BofA thought needed to be That caused lawmakers to remind him he wasunder oath. In February, Lewis testified befor e New York Attorney General Andrew Cuomo that Bernanke and Paulsojn pressured the bank not to discuss its increasingly troubled plan to buy The congressional committee expects to call Paulsojn and Bernanke for similar hearings as it continuesits