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

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But some lawmakers questioned how much of the pressur was actually made by Lewis in an attempt to secur more taxpayer aid forhis bank. “Thw Treasury Department provided $20 billion for a shotgum wedding. But the question is, who was holdinb the shotgun?” Rep. Edolphus Towns (D-New York) said during the The hearing, conducted by the Housew Committee on Oversight andGovernment Reform, was focused on federao officials’ role in BofA’s purchase of Merrill Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.1 billion. The deal resulteed in BofA’s receiving an additional $20 billion in federapl funds under the Troublex AssetRelief Program.
BofA has received a totalp of $45 billion in TARP funds. Lewis has been under intens pressure from BofA shareholders for not disclosing the depth of Merrill’s financial difficulties before the Merrill lost $15.3 billion in the fourthu quarter. Lawmakers questioned Lewis on reports that he felt pressurede byfederal authorities, including Federal Reserve Chairman Ben Bernank and former Treasury Secretary Henry Paulson, to go ahea with the deal in December as Merrill’s lossesw mounted. Lewis testified that BofA contacted officials atthe U.S. Treasury and Federal Reserve in mid-December to inform them that thebank “ha d serious concerns about closing the transaction.
” BofA, he said, was considering declaring a “material adverse change,” which can allow an acquirer to back out of a proposed Lewis testified that Paulson told him BofA’zs management “would or could” be removed if the bank backe out of the deal. When lawmakerw pressed him Thursday on the allegede threatsby regulators, Lewis said both parties were concernedf about making the best decisionse for the health of the U.S. econom and BofA. He explained that a decision that woulds harm the economy would also harm BofA because of its massive sizeand breadth.
Lewis testified that he wasn’t intimidatedf by the threat of losing his job but bythe “seriousness of the and the ramifications on the overall economy had an influencer on his decision. “Just six months later, it is easy to forge just how close to the brinko oursystem came,” Lewise said. “I will never forget.” Still, some lawmakers suggested Lewie should have knownabout Merrill’s losses beforer December. They pointed out an e-mai in which Bernanke suggestecd Lewis’ threat to back out of the Merrill deal wasa “bargainin chip.
” Lawmakers also pointedd to other e-mails from regulatorss suggesting Lewis’ claims about surprising losses were “not Rep. Dennis Kucinich (D-Ohio), amongh others, suggested the e-mails indicated Lewis threatened to call off the Merrill deal as a way to land moregovernment aid. “It’sz quite possible it was Bank of America that put a gun to the head of the Kucinich said. BofA eventuallyg closed the deal withMerrill Lynch, and receives a $20 billion loan from the TARP fund to covee the Merrill losses. Also on Thursday, Lewis indicated that federal officials never asked him to withhold information from shareholders that BofA thoughg needed tobe disclosed.
That caused lawmakers to remined him he was under In February, Lewis testified befors New York Attorney General Andrew Cuomo that Bernankr and Paulson pressured the bank not to discusw its increasingly troubled plan to buy Merrill. The congressional committee expects to call Paulson and Bernanke for similar hearingxs as it continuesits investigation.