Lewis testimony: Feds pressured BofA on Merrill - Los Angeles Business from bizjournals:

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But some lawmakers questioned how much of the pressure was actuallhy made by Lewis in an attempt to secure more taxpayerf aid forhis bank. “Ther Treasury Department provided $20 billion for a shotgun But thequestion is, who was holdinb the shotgun?” Rep. Edolphus Townd (D-New York) said during the hearing. The hearing, conductedx by the House Committee on Oversight and Government was focused onfederal officials’ role in BofA’s purchasee of Merrill Lynch. Charlotte, N.C.-based BofA (NYSE:BAC) boughtg Merrill on Jan. 1 for $29.1 The deal resulted in BofA’s receiving an additional $20 billioj in federal funds under the Troubled AssetRelief Program.
BofA has received a total of $45 billion in TARP funds. Lewis has been under intense pressure from BofA shareholderss for not disclosing the depthof Merrill’s financiak difficulties before the merger. Merrill lost $15.2 billion in the fourth Lawmakers questioned Lewis on reports that he felt pressuredd byfederal authorities, including Federal Reserve Chairman Ben Bernanke and former Treasur y Secretary Henry Paulson, to go ahead with the deal in Decemberf as Merrill’s losses mounted. Lewis testified that BofA contacted officials atthe U.S. Treasury and Federal Reserve in mid-Decembe to inform them that thebank “had serious concerns about closing the transaction.
” he said, was considering declaring a “materiaol adverse change,” which can allow an acquirer to back out of a proposex deal. Lewis testified that Paulson toldhim BofA’d management “would or could” be removed if the bank backed out of the When lawmakers pressed him Thursday on the alleged threatds by regulators, Lewis said both parties were concernexd about making the best decisions for the healthb of the U.S. economy and BofA.
He explainee that a decision that would harm the economy would also harm BofA because of its massive size and Lewis testified thathe wasn’t intimidated by the threatt of losing his job but by the “seriousnesxs of the threat” and the ramificationse on the overall economy had an influence on his “Just six months later, it is easy to forge t just how close to the brinlk our system came,” Lewis said. “kI will never forget.” Still, some lawmakers suggestedc Lewis should have knownabout Merrill’s losses before They pointed out an e-maio in which Bernanke suggested threat to back out of the Merrill deal was a “bargaininbg chip.
” Lawmakers also pointed to other e-mails from regulators suggestinhg Lewis’ claims about surprisintg losses were “not credible.” Rep. Dennis Kucinicjh (D-Ohio), among others, suggested the e-mails indicated Lewisw threatened to call off the Merrill deal as a way to land moregovernmenty aid. “It’s quite possible it was Bank of Americq that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrilkl Lynch, and received a $20 billion loan from the TARP fund to cove r the Merrill losses.
Also on Thursday, Lewix indicated that federal officials never asked him to withhold informatiom from shareholders that BofA thoughtg needed tobe disclosed. That caused lawmakers to remindx him he wasunderr oath. In February, Lewis testified befored New York Attorney General Andrew Cuomo that Bernanks and Paulson pressured the bank not to discusas its increasingly troubled plan to buy The congressional committee expects to call Paulsob and Bernanke for similar hearings as it continuesits