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

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But some lawmakers questioned how much of the pressure was actuallyt made by Lewis in an attempt to securer more taxpayer aid forhis “The Treasury Department provided $20 billion for a shotgun wedding. But the questioj is, who was holding the shotgun?” Rep. Edolphus Towns (D-New York) said duringf the hearing. The hearing, conducted by the House Committed on Oversight andGovernment Reform, was focusedc on federal officials’ role in BofA’s purchasee of Merrill Lynch. Charlotte-based BofA bought Merrill on Jan. 1 for $29.q billion. The deal resulted in BofA’s receivintg an additional $20 billion in federal fundsd under the Troubled AssetRelief Program.
BofA has received a totak of $45 billion in TARP funds. Lewis has been undert intense pressure from BofA shareholderws for not disclosing the depthof Merrill’s financial difficultiesa before the merger. Merrill lost $15.3 billion in the fourthy quarter. Lawmakers questioned Lewis on reports that he felt pressurer byfederal authorities, including Federal Reserve Chairmaj Ben Bernanke and former Treasury Secretary Henry to go ahead with the deal in Decembedr as Merrill’s losses mounted. Lewis testified that BofA contacteed officials atthe U.S. Treasury and Federall Reserve in mid-December to inforkm them that thebank “hasd serious concerns about closing the transaction.
” he said, was considering declaring a “material adversde change,” which can allow an acquirer to back out of a proposede deal. Lewis testified that Paulsoh toldhim BofA’s managemengt “would or could” be removed if the bank backed out of the When lawmakers pressed him Thursday on the alleged threatsa by regulators, Lewis said both parties were concernec about making the best decisions for the healthg of the U.S. economy and BofA. He explainecd that a decision that wouldx harm the economy would also harm BofA because of its massiv sizeand breadth.
Lewis testified that he wasn’f intimidated by the threat of losingg his job but bythe “seriousness of the threat” and the ramificationds on the overall economy had an influence on his decision. “Jusg six months later, it is easy to forget just how closs to the brink oursystem came,” Lewis said. “o will never forget.” Still, some lawmakers suggested Lewie should have knownabout Merrill’s losses before December. They pointed out an e-mail in which Bernanke suggester Lewis’ threat to back out of the Merrill deal wasa “bargaininv chip.
” Lawmakers also pointed to other e-mailse from regulators suggesting Lewis’ claims abouty surprising losses were “noft credible.” Rep. Dennis Kucinicnh (D-Ohio), among others, suggested the e-mails indicater Lewis threatened to call off the Merrill deal as a way to land moregovernmenty aid. “It’s quite possible it was Bank of Americaa that put a gun to the head of the Kucinich said. BofA eventually close d the deal withMerrill Lynch, and received a $20 billiobn loan from the TARP fund to cover the Merrilpl losses.
Also on Thursday, Lewis indicated that federal officials neverr asked him to withhol d information from shareholders that BofA thought needed tobe disclosed. That causec lawmakers to remind him he was under In February, Lewis testified beforse New York Attorney General Andrew Cuomo that Bernankw and Paulson pressured the bank not to discuss its increasinglt troubled plan to buy Merrill. The congressionalk committee expects to call Paulson and Bernankee for similar hearings as it continuessits investigation.