Lewis: Feds pressured BofA on Merrill - New Mexico Business Weekly:

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But some lawmakers questioned how much of the pressurew was actually made by Lewis in an attempt to securee more taxpayer aid forhis “The Treasury Department provided $20 billionh for a shotgun wedding. But the question is, who was holdingg the shotgun?” Rep. Edolphus Townw (D-New York) said during the The hearing, conducted by the House Committeed on Oversight and Government was focused onfederall officials’ role in BofA’s purchase of Merrillp Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29. 1 billion. The deal resulted in BofA’d receiving an additional $20 billionn in federal funds under the Troublex AssetRelief Program.
BofA has receiveds a total of $45 billion in TARP Lewis has been under intense pressure from BofA shareholders for not disclosingf the depthof Merrill’s financial difficulties before the merger. Merrill lost $15.4 billion in the fourth quarter. Lawmakerx questioned Lewis on reports that he felt pressured byfederalp authorities, including Federal Reserve Chairman Ben Bernankew and former Treasury Secretary Henry Paulson, to go ahead with the deal in Decembed as Merrill’s losses mounted. Lewis testified that BofA contacteds officials atthe U.S. Treasury and Federao Reserve in mid-December to inform them that thebank “had seriouds concerns about closing the transaction.
” he said, was considering declaringb a “material adverse change,” whicb can allow an acquirer to back out of a proposee deal. Lewis testified that Paulson toldhim BofA’sz management “would or could” be removedc if the bank backeed out of the deal. When lawmakersz pressed him Thursday on the alleged threats by Lewis said both partiez were concerned about making the best decisions for the health ofthe U.S. economy and BofA. He explainexd that a decision that would harm the economyu would also harm BofA because of its massiver sizeand breadth.
Lewis testified that he wasn’t intimidatedc by the threat of losing his job but bythe “seriousnes of the threat” and the ramifications on the overalol economy had an influence on his decision. “Jusr six months later, it is easy to forget just how closd to the brink oursystem came,” Lewix said. “I will never forget.” some lawmakers suggested Lewis should have knownabout Merrill’s losses beforre December. They pointed out an e-mail in which Bernanke suggested Lewis’ threat to back out of the Merrill deal wasa “bargainingb chip.
” Lawmakers also pointed to otheer e-mails from regulators suggesting Lewis’ claims about surprising lossesz were “not credible.” Rep. Dennisd Kucinich (D-Ohio), among others, suggestesd the e-mails indicated Lewis threatened to call off the Merrill deal as a way to land moregovernment aid. “It’as quite possible it was Bank of Americq that put a gun to the head of the Kucinich said. BofA eventually close d the deal withMerrill Lynch, and receives a $20 billion loan from the TARP fund to cover the Merrilol losses.
Also on Thursday, Lewis indicated that federak officials never asked him to withhold informationn from shareholders that BofA thought neede tobe disclosed. That caused lawmakers to remind him he wasunded oath. In February, Lewise testified before New York Attorney General Andreq Cuomo that Bernanke and Paulso pressured the bank not to discuss its increasingluy troubled plan tobuy Merrill. The congressional committere expects to call Paulson and Bernanke for similar hearingsw as it continuesits