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

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But some lawmakers questioned how much of the pressure was actuallty made by Lewis in an attempt to secure more taxpayer aid forhis bank. “The Treasury Department providex $20 billion for a shotgun wedding. But the question is, who was holding the Rep. Edolphus Towns (D-New said during the hearing. The conducted by the House Committee on Oversight andGovernmentg Reform, was focused on federal officials’ role in BofA’s purchaswe of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) boughtf Merrill on Jan. 1 for $29.1 billion. The deal resulteds in BofA’s receiving an additional $20 billion in federalp funds under the Troubled AssetrRelief Program.
BofA has receivedf a total of $45 billion in TARP funds. Lewis has been unde r intense pressure from BofA shareholders for not disclosinvg the depthof Merrill’s financial difficulties before the Merrill lost $15.3 billion in the fourthb quarter. Lawmakers questioned Lewis on reporta that he felt pressured byfederal authorities, includinhg Federal Reserve Chairman Ben Bernankee and former Treasury Secretary Henry Paulson, to go ahea with the deal in December as Merrill’as losses mounted. Lewis testified that BofA contacted officialss atthe U.S.
Treasury and Federa Reserve in mid-December to inform them that thebank “had serious concerns about closing the BofA, he said, was considering declaring a “material adverswe change,” which can allow an acquirer to back out of a proposedd deal. Lewis testified that Paulson toldhim BofA’ws management “would or could” be removed if the bank backed out of the deal. When lawmakers pressedf him Thursday on the alleged threatdsby regulators, Lewis said both parties were concerned about makin the best decisions for the health of the U.S. economy and BofA.
He explained that a decisionb that would harm the economy would also harm BofA because of its massivde sizeand breadth. Lewis testified that he wasn’t intimidated by the threat of losing his job but bythe “seriousnesxs of the threat” and the ramifications on the overallp economy had an influence on his decision. “Just six months later, it is easy to forgef just how close to the brino oursystem came,” Lewis said. “u will never forget.” Still, some lawmakersd suggested Lewis should have knownabouyt Merrill’s losses before December.
They pointef out an e-mail in which Bernanke suggested Lewis’ threat to back out of the Merril l deal wasa “bargaining chip.” Lawmakers also pointed to other e-mailsx from regulators suggesting Lewis’ claims about surprisinf losses were “not credible.” Rep. Denni s Kucinich (D-Ohio), among others, suggeste the e-mails indicated Lewis threatenede to call off the Merrill deal as a way to land moregovernmenty aid. “It’s quite possibld it was Bank of America that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrill Lynch, and received a $20 billio n loan from the TARP fund to cover the Merrilk losses.
Also on Thursday, Lewis indicated that federal officials neve asked him to withhold information from shareholders that BofA thought neededs tobe disclosed. That causede lawmakers to remind him he was under In February, Lewis testified beforde New York Attorney Generakl Andrew Cuomo that Bernanke and Paulson pressured the bank not to discusds its increasingly troubled plan to buy Merrill. The congressional committee expectsd to call Paulson and Bernanke for similatr hearings as it continuesits investigation.