Lewis testimony: Feds pressured BofA on Merrill - Los Angeles Business from bizjournals:

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But some lawmakers questioned how much of the pressure was actualluy made by Lewis in an attempg to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgujn wedding. But the question is, who was holding the Rep. Edolphus Towns (D-New York) said during the The hearing, conducted by the Hous Committee on Oversight andGovernment Reform, was focused on federap officials’ role in BofA’s purchase of Merrill Lynch. Charlotte, N.C.-based BofA (NYSE:BAC) bought Merrilkl on Jan. 1 for $29.1 billion. The deal resultex in BofA’s receiving an additional $20 billion in federal fund under the Troubled AssetRelief Program.
BofA has received a tota of $45 billion in TARP funds. Lewisd has been under intense pressurew from BofA shareholders for not disclosing the depthof Merrill’s financiall difficulties before the merger. Merrill lost $15.3 billionn in the fourth quarter. Lawmakers questioned Lewis on reportsx that he felt pressured byfederal authorities, includinv Federal Reserve Chairman Ben Bernankde and former Treasury Secretary Henry Paulson, to go ahead with the deal in Decembefr as Merrill’s losses mounted. Lewis testified that BofA contacted officials atthe U.S.
Treasur y and Federal Reserve in mid-December to inform them that thebank “haxd serious concerns about closing the BofA, he said, was considering declaring a “material advers change,” which can allow an acquirer to back out of a proposec deal. Lewis testified that Paulson toldhim BofA’s managemenf “would or could” be removed if the bank backed out of the When lawmakers pressed him Thursday on the alleged threats by Lewis said both parties were concerned abouyt making the best decisions for the healtu of the U.S. economy and BofA. He explained that a decisiomn that would harm the economy wouls also harm BofA becauser of its massive sizeand breadth.
Lewise testified that he wasn’t intimidatedf by the threat of losing his job but bythe “seriousnesss of the threat” and the ramificationx on the overall economh had an influence on his decision. “Just six months it is easy to forger just how close to the brinjk oursystem came,” Lewis said. “I will nevef forget.” Still, some lawmakers suggestesd Lewis should have knownabout Merrill’s lossesz before December. They pointed out an e-mail in which Bernanke suggesteed Lewis’ threat to back out of the Merrilll deal wasa “bargaininfg chip.
” Lawmakers also pointed to other e-maila from regulators suggesting Lewis’ claims aboutt surprising losses were “not credible.” Rep. Dennis Kucinichg (D-Ohio), among others, suggested the e-mail indicated Lewis threatened to call off the Merrill deal as a way to land moregovernmenyt aid. “It’s quite possible it was Bank of Americ that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrilo Lynch, and received a $20 billiob loan from the TARP fund to covedr the Merrill losses.
Also on Lewis indicated that federap officials never asked him to withhold information from shareholderas that BofA thought needed to be That caused lawmakers to reminxd him he wasunder oath. In February, Lewis testifie d before New York Attorney General Andrew Cuomo that Bernanke and Paulson pressuref the bank not to discuss its increasinglt troubled plan tobuy Merrill. The congressional committe e expects to call Paulson and Bernanke for similar hearings as it continuexsits investigation.