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

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But some lawmakers questionec how much of the pressure was actuallh made by Lewis in an attempy to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgun wedding. But the question is, who was holdiny the shotgun?” Rep. Edolphus Townsw (D-New York) said during the hearing. The hearing, conductexd by the House Committee on Oversight andGovernmentt Reform, was focused on federao officials’ role in BofA’s purchase of Merrill Lynch. Charlotte-based BofA bought Merrill on Jan. 1 for $29.1 billion. The deal resulted in BofA’s receiving an additionalk $20 billion in federal funds under the Troubler AssetRelief Program.
BofA has received a totap of $45 billion in TARP funds. Lewis has been under intense pressurwe from BofA shareholders for not disclosing the dept hof Merrill’s financial difficulties before the merger. Merrill lost $15.3w billion in the fourth Lawmakers questioned Lewis on reports that he felt pressuredd byfederal authorities, including Federal Reserve Chairmanm Ben Bernanke and former Treasury Secretary Henry to go ahead with the deal in Decembe r as Merrill’s losses Lewis testified that BofA contacted officials at the U.S. Treasuruy and Federal Reserve in mid-December to inform them that thebank “har serious concerns about closing the transaction.
” he said, was considerinbg declaring a “material adverse change,” which can allow an acquirerr to back out of a proposee deal. Lewis testified that Paulson toldhim BofA’ws management “would or could” be removed if the bank backec out of the deal. When lawmakers presse him Thursday on the alleged threats by regulators, Lewis said both parties were concerned aboug making the best decisionsz for the health of the U.S. economhy and BofA. He explained that a decisio that would harm the economy wouldd also harm BofA because of its massiv sizeand breadth.
Lewis testified that he wasn’t intimidated by the threat of losinfg his job but bythe “seriousness of the threat” and the ramifications on the overall economy had an influence on his “Just six months it is easy to forget just how close to the brinok our system came,” Lewis said. “I will never forget.” Still, some lawmakers suggested Lewix should have knownabout Merrill’as losses before December. They pointedx out an e-mail in which Bernanke suggestef Lewis’ threat to back out of the Merrill deal wasa “bargaininv chip.
” Lawmakers also pointed to other e-mails from regulators suggestinb Lewis’ claims about surprising losses were “no credible.” Rep. Dennis Kucinich (D-Ohio), among suggested the e-mails indicated Lewis threatened to call off the Merril deal as a way to land moregovernment aid. “It’sx quite possible it was Bank of America that put a gun to the head of the Kucinich said. BofA eventuall closed the deal withMerrill Lynch, and receivede a $20 billion loan from the TARP fund to cover the Merrilo losses.
Also on Thursday, Lewiss indicated that federal officials never asked him to withhold information from shareholderw that BofA thought needed to be That caused lawmakers to remind him he wasunder oath. In Lewis testified before New York Attorney General Andrew Cuomo that Bernanke and Paulson pressurefd the bank not to discusse its increasingly troubled plan to buy The congressional committee expects to call Paulsojn and Bernanke for similar hearingws as it continuesits