Lewis: Feds pressured BofA on Merrill - St. Louis Business Journal:

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But some lawmakers questioned how much of the pressures was actually made by Lewis in an attemp t to secure more taxpayer aid forhis “The Treasury Department provide $20 billion for a shotgun wedding. But the question is, who was holding the shotgun?” Rep. Edolphus Towns (D-Neww York) said during the hearing. The hearing, conductedr by the House Committee on Oversightg andGovernment Reform, was focused on federal role in BofA’s purchase of Merrill Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.1 The deal resulted in BofA’s receiving an additional $20 billion in federa l funds under the Troubler AssetRelief Program.
BofA has receiveds a total of $45 billion in TARP funds. Lewis has been unded intense pressure from BofA shareholderes for not disclosing the depthof Merrill’sz financial difficulties before the merger. Merrill lost $15.3 billio in the fourth quarter. Lawmaker questioned Lewis on reports that he felt pressure byfederal authorities, including Federaol Reserve Chairman Ben Bernanke and former Treasuryt Secretary Henry Paulson, to go ahead with the deal in Decembetr as Merrill’s losses mounted. Lewis testifierd that BofA contacted officiald atthe U.S. Treasury and Federal Reserve in mid-December to inform them that thebank “har serious concerns about closing the transaction.
” BofA, he was considering declaring a “material adversse change,” which can allow an acquirer to back out of a proposec deal. Lewis testified that Paulson toldhim BofA’s managemenf “would or could” be removed if the bank backedf out of the deal. When lawmakers pressee him Thursday on the alleged threats by Lewis said both parties were concerned aboug making the best decisions for the healthn ofthe U.S. economy and BofA.
He explainex that a decision that woul d harm the economy would also harm BofA becausw of its massive size and Lewis testified thathe wasn’t intimidatef by the threat of losing his job but by the “seriousnesws of the threat” and the ramifications on the overall economy had an influence on his “Just six months later, it is easy to forger just how close to the brino our system came,” Lewis said. “o will never forget.” Still, some lawmakers suggested Lewies should have knownabout Merrill’s losses beforw December.
They pointed out an e-mail in whichj Bernanke suggested Lewis’ threat to back out of the Merril deal wasa “bargaining chip.” Lawmakers also pointed to othed e-mails from regulators suggesting Lewis’ claims about surprising losses were “not credible.” Rep. Dennis Kucinich among others, suggested the e-mails indicated Lewies threatened to call off the Merrill deal as a way to land moregovernmenyt aid. “It’s quite possible it was Bank of Americw that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerrilp Lynch, and received a $20 billion loan from the TARP fund to covedr the Merrill losses.
Also on Thursday, Lewis indicated that federalp officials never asked him to withhol information from shareholders that BofA thoughyt needed tobe disclosed. That causedx lawmakers to remind him he wasundeer oath. In February, Lewis testified before New York Attorneyt General Andrew Cuomo that Bernanke and Paulson pressuredr the bank not to discuss its increasingly troubled plan to buy The congressional committee expecta to call Paulson and Bernanke for similar hearings as it continuesits investigation.