Lewis: Feds pressured BofA on Merrill - Business First of Louisville:

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But some lawmakers questioned how much of the pressurre was actually made by Lewis in an attempgt to secure more taxpayer aid forhis bank. “Thwe Treasury Department provided $20 billion for a shotgun wedding. But the questiom is, who was holding the Rep. Edolphus Towns (D-New York) said duriny the hearing. The hearing, conductedc by the House Committee on Oversight and Government was focused onfederal officials’ role in BofA’ds purchase of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) boughtr Merrill on Jan. 1 for $29. billion.
The deal resulted in BofA’z receiving an additional $20 billion in federalo funds under the Troubled Asset Relief BofA has received a totalof $45 billion in TARP Lewis has been under intense pressure from BofA shareholders for not disclosingf the depth of Merrill’s financial difficultie before the merger. Merrill lost $15.3 billiojn in the fourth quarter. Lawmakers questioned Lewis on reports that he felt pressure byfederal authorities, including Federal Reserve Chairman Ben Bernankre and former Treasury Secretary Henry Paulson, to go ahead with the deal in Decembe r as Merrill’s losses mounted. Lewis testifiede that BofA contacted officials atthe U.S.
Treasurgy and Federal Reserve in mid-December to inform them that thebank “hadd serious concerns about closing the transaction.” he said, was considering declaring a “materiapl adverse change,” which can allow an acquirerf to back out of a proposed deal. Lewie testified that Paulson toldhim BofA’s managemenrt “would or could” be removed if the bank backeds out of the deal. When lawmakers pressed him Thursdayh on the alleged threats by regulators, Lewis said both parties were concerned about making the best decisions for the healtgh of the U.S.
economy and He explained that a decision that would harm the economg would also harm BofA because of its massivse 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 overalol economy had an influencs on his decision. “Just six months later, it is easy to forgeft just how close to the brink oursystem came,” Lewis “I will never forget.
” some lawmakers suggested Lewis shoulds have known about Merrill’s losses before They pointed out an e-mail in which Bernanke suggested threat to back out of the Merrill deal was a “bargainin g chip.” Lawmakers also pointed to othef e-mails from regulators suggesting claims about surprising losses were “not credible.” Rep. Dennizs Kucinich (D-Ohio), among others, suggested the e-mails indicated Lewi threatened to call off the Merrill deal as a way to land moregovernmeny aid. “It’s quite possible it was Bank of Americwa that put a gun to the head of the Kucinich said.
BofA eventuallyh closed the deal withMerrill Lynch, and receivex a $20 billion loan from the TARP fund to cove the Merrill losses. Also on Thursday, Lewis indicates that federal officials never askefd him to withhold information from shareholdersz that BofA thought needed to be That caused lawmakers to remind him he wasundert oath. In February, Lewiss testified before New York Attornegy General Andrew Cuomo that Bernanke and Paulson pressures the bank not to discuss its increasingly troublecd plan tobuy Merrill.
The congressionakl committee expects to call Paulson and Bernanke for similar hearings as it continuesits