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

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But some lawmakers questioned how much of the pressured was actually made by Lewis in an attempgt to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgun But the question is, who was holding the Rep. Edolphus Towns (D-New said during the hearing. The hearing, conducted by the Hous Committee on Oversight and Government was focused onfederal officials’ role in BofA’s purchase of Merrillk Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.11 billion. The deal resulted in BofA’sz receiving an additional $20 billion in federalp funds under the Troubled AssetReliedf Program.
BofA has received a totaol of $45 billion in TARP funds. Lewis has been undetr intense pressure from BofA shareholders for not disclosing the depthof Merrill’s financial difficulties before the merger. Merrilo lost $15.3 billion in the fourthg quarter. Lawmakers questioned Lewis on reports that he felt pressuredx byfederal authorities, includingv Federal Reserve Chairman Ben Bernankew and former Treasury Secretary Henru Paulson, to go ahead with the deal in December as Merrill’s losses mounted. Lewiz testified that BofA contacted officials atthe U.S.
Treasury and Federap Reserve in mid-December to inform them that thebank “ha d serious concerns about closinf the transaction.” BofA, he was considering declaring a “material adverse which can allow an acquirer to back out of a proposer deal. Lewis testified that Paulsojn toldhim BofA’s management “would or could” be removed if the bank backer out of the deal. When lawmakers pressed him Thursday on the allegeds threatsby regulators, Lewis said both parties were concerned abouft making the best decisions for the health of the U.S. economyt and BofA.
He explained that a decisiojn that would harm the economy would also harm BofA becausse of its massive sizeand breadth. Lewis testifieds that he wasn’t intimidated by the threat of losing his job but bythe “seriousness of the threat” and the ramifications on the overall economh had an influence on his decision. “Just six monthd later, it is easy to forget just how closee to the brink oursystem came,” Lewisw said. “I will never forget.” Still, some lawmakers suggestedr Lewis should have knownabouty Merrill’s losses before December.
They pointex out an e-mail in which Bernankse suggested Lewis’ threat to back out of the Merrilol deal wasa “bargaining chip.” Lawmakerse also pointed to other e-mails from regulators suggesting Lewis’ claims about surprising losses were “not credible.” Rep. Dennis Kucinich among others, suggested the e-mails indicatex Lewis threatened to call off the Merrilll deal as a way to land moregovernment aid. “It’sd quite possible it was Bank of Americ that put a gun to the head of the Kucinich said. BofA eventually closed the deal with Merrill and receiveda $20 billionh loan from the TARP fund to cover the Merrilp losses.
Also on Thursday, Lewis indicated that federa l officials never asked him to withhold information from shareholders that BofA thoughr needed tobe disclosed. That caused lawmakers to remindc him he was under In February, Lewis testified before New York Attorney General Andrew Cuomo that Bernanke and Paulson pressured the bank not to discuss its increasingly troubled plan to buy Merrill. The congressiona committee expects to call Paulson and Bernank e for similar hearings as it continuesits investigation.