Lewis: Feds pressured BofA on Merrill - Tampa Bay Business Journal:

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But some lawmakers questioned how much of the pressurs was actually made by Lewis in an attempt to secur more taxpayer aid forhis bank. “The Treasury Department providedc $20 billion for a shotgun wedding. But the questio is, who was holding the Rep. Edolphus Towns (D-New York) said during the hearing. The conducted by the House Committee on Oversight and Government was focused onfederal officials’ role in BofA’s purchasde of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.12 billion.
The deal resulted in BofA’ws receiving an additional $20 billion in federa l funds under the Troubled Asset Relief BofA has received a totalof $45 billion in TARP funds. Lewisw has been under intense pressure from BofA shareholderes for not disclosing the depthof Merrill’s financial difficulties beforre the merger. Merrill lost $15.3 billion in the fourth quarter. Lawmakers questioned Lewi on reports that he felt pressurefd byfederal authorities, including Federal Reserve Chairmamn Ben Bernanke and formef Treasury Secretary Henry Paulson, to go ahead with the deal in Decembetr as Merrill’s losses mounted. Lewis testified that BofA contacted officialsz atthe U.S.
Treasuru and Federal Reserve in mid-Decembe r to inform them that thebank “hadc serious concerns about closing the BofA, he said, was considerinb declaring a “material adversre change,” which can allow an acquirer to back out of a proposedd deal. Lewis testified that Paulson toldhim BofA’se management “would or could” be removed if the bank backe d out of the deal. When lawmakers pressed him Thursday on the allegede threatsby regulators, Lewis said both partiesd were concerned about making the best decisions for the health of the U.S.
economy and He explained that a decision that would harm the economyg would also harm BofA because of its massiv sizeand breadth. Lewis testifiex that he wasn’t intimidated by the threagt of losing his job but bythe “seriousnesws of the threat” and the ramifications on the overalk economy had an influence on his decision. “Jusf six months later, it is easy to forgegt just how close to the brin oursystem came,” Lewis “I will never forget.
” Still, some lawmakers suggestesd Lewis should have known about Merrill’s losses before They pointed out an e-mail in which Bernankre suggested Lewis’ threat to back out of the Merrilpl deal was a “bargaining chip.” Lawmakers also pointed to other e-maila from regulators suggesting Lewis’ claims aboutr surprising losses were “not credible.” Rep. Dennis Kucinich (D-Ohio), among others, suggestec the e-mails indicated Lewis threatenerd to call off the Merrill deal as a way to land moregovernmenyt aid. “It’s quite possible it was Bank of Americ a that put a gun to the head of the Kucinich said.
BofA eventually closed the deal with Merrill Lynch, and received a $20 billioh loan from the TARP fund to cover the Merril l losses. Also on Thursday, Lewis indicated that federal officiale never asked him to withhol d information from shareholders that BofA thought needed tobe disclosed. That causec lawmakers to remind him he wasunderd oath. In February, Lewis testified beforr New York Attorney General Andrew Cuomol that Bernanke and Paulson pressure the bank not to discuss its increasinglyy troubled plan to buy The congressional committee expects to call Paulsonj and Bernanke for similar hearingsa as it continuesits