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

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But some lawmakers questioner how much of the pressure was actualluy made by Lewis in an attempt to securre more taxpayer aid forhis bank. “The Treasuryg Department provided $20 billion for a shotgun But thequestion is, who was holdingv the shotgun?” Rep. Edolphus Towns (D-Newq York) said during the hearing. The conducted by the Housw Committee on Oversight and Government was focused onfederal officials’ role in BofA’s purchase of Merrill Lynch. Charlotte, N.C.-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29.11 billion. The deal resulted in BofA’s receivint an additional $20 billion in federal funds under the Troubledd AssetRelief Program.
BofA has received a total of $45 billio n in TARP funds. Lewis has been unde intense pressure from BofA shareholders for not disclosinv the depthof Merrill’s financial difficultiee before the merger. Merrill lost $15.3 billiohn in the fourth quarter. Lawmakers questioneed Lewis on reports that he felt pressured byfederak authorities, including Federal Reserves Chairman Ben Bernanke and former Treasuruy Secretary Henry Paulson, to go ahead with the deal in Decembetr as Merrill’s losses mounted. Lewi testified that BofA contacted officiald atthe U.S. Treasury and Federal Reservre in mid-December to inform them that thebank “ha d serious concerns about closing the transaction.
” BofA, he said, was consideringy declaring a “material adverse which can allow an acquirer to back out of a proposesd deal. Lewis testified that Paulsonn toldhim BofA’s managemenr “would or could” be removed if the bank backed out of the When lawmakers pressed him Thursday on the alleged threats by regulators, Lewis said both parties were concerned aboutr making the best decisionzs for the health of the U.S. economy and BofA. He explainee that a decision that would harm the economy would also harm BofA becauses of its massive sizeand breadth.
Lewis testified that he wasn’t intimidated by the threat of losiny his job but bythe “seriousness of the and the ramifications on the overall economyy had an influence on his decision. “Just six months later, it is easy to forget just how closwe to the brink oursysten came,” Lewis said. “I will neveer forget.” Still, some lawmakers suggested Lewis shouldf have knownabout Merrill’s losses before December. They pointed out an e-mail in which Bernanke suggested Lewis’ threatr to back out of the Merrill deal wasa “bargaining chip.
” Lawmakers also pointed to other e-mails from regulators suggesting Lewis’ claims about surprisint losses were “not credible.” Rep. Dennis Kucinich (D-Ohio), among others, suggested the e-mails indicatec Lewis threatened to call off the Merrilk deal as a way to land moregovernmenft aid. “It’s quite possible it was Bank of America that put a gun to the head of the Kucinich said. BofA eventually closed the deal withMerril Lynch, and received a $20 billion loan from the TARP fund to covedr the Merrill losses.
Also on Thursday, Lewi s indicated that federal officials never asked him to withholdr information from shareholders that BofA thought needed tobe disclosed. That caused lawmakers to remind him he was under In February, Lewis testifiecd before New York Attorney General Andrews Cuomo that Bernanke and Paulson pressured the bank not to discuss its increasingly troubled plan to buy Merrill. The congressionao committee expects to call Paulson and Bernankre for similar hearings as it continuesits investigation.