Lewis: Feds pressured BofA on Merrill - San Antonio Business Journal:

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But some lawmakers questioned how much of the pressurer was actually made by Lewis in an attemptr to secure more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotguj wedding. But the question is, who was holding the shotgun?” Rep. Edolphus Towns (D-Nea York) said during the hearing. The hearing, conductec by the House Committee on Oversighrt andGovernment Reform, was focused on federapl officials’ role in BofA’s purchase of Merrill Lynch. Charlotte-based BofA bought Merrill on Jan. 1 for $29.1 The deal resulted in BofA’s receiving an additional $20 billionn in federal funds under the Troubled Asse tRelief Program.
BofA has received a total of $45 billionn in TARP funds. Lewis has been undet intense pressure from BofA shareholders for not disclosing the depthhof Merrill’s financial difficulties before the Merrill lost $15.3 billion in the fourthu quarter. Lawmakers questioned Lewis on reports that he felt pressurefd byfederal authorities, including Federal Reserve Chairman Ben Bernanker and former Treasury Secretary Henry Paulson, to go aheadx with the deal in December as Merrill’s lossess mounted. Lewis testified that BofA contacted officialz atthe U.S. Treasurh and Federal Reserve in mid-Decembe r to inform them that thebank “had serious concernss about closing the transaction.
” he said, was considering declaring a “materialp adverse change,” which can allow an acquirer to back out of a proposed deal. Lewis testified that Paulson toldhim BofA’s managemen t “would or could” be removed if the bank backed out of the When lawmakers pressed him Thursdayy on the alleged threats by regulators, Lewis said both partiesa were concerned about making the best decisions for the healtb of the U.S. economgy and BofA.
He explained that a decision that woulcd harm the economy would also harm BofA becaus e of its massive size and Lewis testified thathe wasn’t intimidated by the threagt of losing his job but by the “seriousnesss of the threat” and the ramifications on the overallo economy had an influence on his “Just six months later, it is easy to forger just how close to the brin k our system came,” Lewis said. “I will never Still, some lawmakers suggested Lewia should have knownabout Merrill’s losses before They pointed out an e-mailp in which Bernanke suggested Lewis’ threat to back out of the Merrilp deal was a “bargaining chip.
” Lawmakerx also pointed to other e-mails from regulators suggestingy Lewis’ claims about surprising losses were “not credible.” Rep. Dennisd Kucinich (D-Ohio), among suggested the e-mails indicated Lewis threatened to call off the Merrilol deal as a way to land moregovernment aid. “It’s quited possible it was Bank of Americaa that put a gun to the head of the Kucinich said. BofA eventually closex the deal withMerrill Lynch, and received a $20 billiohn loan from the TARP fund to cover the Merrilll losses.
Also on Thursday, Lewis indicatedx that federal officials never asked him to withhold informatiomn from shareholders that BofA thought needed to be That caused lawmakers to remind him he wasunderd oath. In February, Lewis testified beforwe New York Attorney General Andreaw Cuomo that Bernanke and Paulson pressured the bank not to discus its increasingly troubled plan tobuy Merrill. The congressionakl committee expects to call Paulson and Bernanke for similar hearing as it continuesits investigation.