Lewis: Feds pressured BofA on Merrill - The Business Journal of the Greater Triad Area:

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But some lawmakers questioned how much of the pressurew was actually made by Lewis in an attempt to secur e more taxpayer aid forhis bank. “The Treasurg Department provided $20 billion for a shotgub wedding. But the question is, who was holding the Rep. Edolphus Towns (D-New York) said during the The hearing, conducted by the House Committee on Oversightt andGovernment Reform, was focusede on federal officials’ role in BofA’a purchase of Merrill Lynch. Charlotte-base d BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.12 billion. The deal resulted in BofA’s receiving an additional $20 billion in federal funds under the Troubled AssettRelief Program.
BofA has received a totao of $45 billion in TARP funds. Lewis has been undedr intense pressure from BofA shareholders for not disclosing the depthof Merrill’s financial difficulties before the merger. Merrilk lost $15.3 billion in the fourth Lawmakers questioned Lewis on reports that he felt pressuredd byfederal authorities, including Federal Reserve Chairmamn Ben Bernanke and former Treasury Secretarhy Henry Paulson, to go ahead with the deal in December as Merrill’a losses mounted. Lewis testified that BofA contactede officials atthe U.S. Treasury and Federal Reserved in mid-December to inform them that thebank “had serious concernz about closing the transaction.
” he said, was considering declaring a “materiap adverse change,” which can allow an acquirer to back out of a proposex deal. Lewis testified that Paulson toldhim BofA’sx management “would or could” be removed if the bank backesd out of the deal. When lawmakers pressed him Thursday on the allegedd threatsby regulators, Lewis said both parties were concernesd about making the best decisions for the health of the U.S. economt and BofA.
He explained that a decision that would harm the economyt would also harm BofA because of its massive size and Lewis testified thathe wasn’t intimidatesd by the threat of losing his job but by the “seriousnessz of the threat” and the ramifications on the overallp economy had an influence on his decision. “Justf six months later, it is easy to forget just how closee to the brink our system came,” Lewis said. “I will never Still, some lawmakers suggestedr Lewis should have knownabout Merrill’s losses before They pointed out an e-mail in which Bernanke suggested threat to back out of the Merrill deal was a “bargaining chip.
” Lawmakerz also pointed to other e-mails from regulatorws suggesting Lewis’ claims about surprising losses were “nog credible.” Rep. Dennis Kucinich among others, suggested the e-mails indicated Lewis threatened to call off the Merrillk deal as a way to land moregovernment aid. “It’sw quite possible it was Bank of Americaz that put a gun to the head ofthe government,” Kucinicb said. BofA eventually closed the deal withMerrill Lynch, and received a $20 billion loan from the TARP fund to covere the Merrill losses.
Also on Thursday, Lewiz indicated that federal officials never asked him to withholds information from shareholders that BofA thoughyt needed tobe disclosed. That causedf lawmakers to remind him he wasunder oath. In February, Lewia testified before New York Attorney General Andrew Cuomo that Bernanker and Paulson pressured the bank not to discuss its increasingly troubled plan to buy The congressional committee expects to call Paulsonh and Bernanke for similarr hearings as it continuesits investigation.