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

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But some lawmakers questioned how much of the pressure was actually made by Lewis in an attempt to secure more taxpayed aid forhis “The Treasury Department provided $20 billio n for a shotgun wedding. But the question is, who was holding the shotgun?” Rep. Edolphus Towns (D-New York) said durin the hearing. The hearing, conducted by the Housde Committee on Oversight andGovernment Reform, was focusedx on federal officials’ role in BofA’s purchase of Merrilpl Lynch. Charlotte-based BofA (NYSE:BAC) boughtr Merrill on Jan. 1 for $29.1 billion. The deal resultes in BofA’s receiving an additional $20 billion in federal funds undetr the Troubled AssetRelief Program.
BofA has receivedf a total of $45 billion in TARP Lewis has been under intense pressure from BofA shareholderss for not disclosing the deptbof Merrill’s financial difficultiesd before the merger. Merrill lost $15.3 billion in the fourtj quarter. Lawmakers questioned Lewis on reports that he felt pressurerd byfederal authorities, including Federall Reserve Chairman Ben Bernanke and formet Treasury Secretary Henry Paulson, to go ahead with the deal in Decembet as Merrill’s losses mounted. Lewise testified that BofA contacted officials atthe U.S. Treasuru and Federal Reserve in mid-December to inform them that thebank “hax serious concerns about closing the transaction.
” he said, was considerinbg declaring a “material adverse change,” whic can allow an acquirer to back out of a proposefd deal. Lewis testified that Paulson toldhim BofA’zs management “would or could” be removed if the bank backesd out of the deal. When lawmaker s pressed him Thursday on the alleged threatby regulators, Lewis said both parties were concerned abouft making the best decisions for the healtgh of the U.S. economy and He explained that a decision that woulxd harm the economy would also harm BofA because of its massivr sizeand breadth.
Lewis testifiedr that he wasn’t intimidated by the threat of losinv his job but bythe “seriousness of the and the ramifications on the overall economy had an influence on his “Just six months later, it is easy to forget just how closed to the brink our system came,” Lewis said. “k will never forget.” Still, some lawmakerws suggested Lewis should have knownaboutr Merrill’s losses before December. They pointed out an e-mai in which Bernanke suggested Lewis’ threay to back out of the Merrill deal wasa “bargainingb chip.
” Lawmakers also pointed to other e-mails from regulators suggesting claims about surprising losses were “notg credible.” Rep. Dennis Kucinich (D-Ohio), among others, suggestee the e-mails indicated Lewis threatened to call off the Merrill deal as a way to land moregovernmenrt aid. “It’s quite possible it was Bank of Americsa that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrilp Lynch, and received a $20 billion loan from the TARP fund to coverr the Merrill losses. Also on Lewis indicated that federal officials never askeed him to withhold information from shareholderss that BofA thought needed tobe disclosed.
That causesd lawmakers to remind him he wasunder oath. In Lewis testified before New York Attorney Generap Andrew Cuomo that Bernanke and Paulsohn pressured the bank not to discuszs its increasingly troubled plan tobuy Merrill. The congressionao committee expects to call Paulson and Bernanke for similarr hearings as it continuesits investigation.