B of A's Lewis: Feds threatened ouster over Merrill deal
Filed under: Company News
Bank of America (BAC) CEO Ken Lewis told Congress that government officials threatened him with removal if he pulled out of a $50 billion deal to buy Merrill Lynch last year. Appearing before the House Oversight Committee, Lewis also faced pointed questioning from Rep. Dennis Kucinich (D-Ohio) and others over when he learned about losses at Merrill Lynch, which mounted rapidly last November and December. They asked whether Bank of America explored scuttling the acquisition in order to pressure the government to provide more assistance for the deal.
Despite sporadic moments of drama, many of the broad strokes of the Federal Reserve and Treasury Department's involvement in the Bank of America-Merill Lynch deal have been known for a while. The Wall Street Journal reported on clashes between Lewis and Fed and Treasury officials in February, and an investigation by New York Attorney General Andrew Cuomo wrapped up in April concluded that the Bank of America CEO could've been ousted if the company abandoned its purchase of Merrill.
What's new, then? Lewis' testimony under oath puts in public view for the first time discussions between the company and federal officials over whether BofA executives would seek to torpedo the Merrill deal due to huge losses which could have been seen as a "material adverse change" in the brokerage's financial health, potentially nullifying the merger agreement between the firms.
"It is true that we were told that if we went through with calling a [material adverse change], the government would remove the management and board," Lewis testified.
The emails also show that Fed officials saw Lewis' claim that he was surprised by Merrill's losses as "somewhat suspect."
It's possible more hearings on the BofA-Merrill deal may be in the works. Rep. Darryl Issa (R-Calif.) suggested the oversight committee could call Bernanke and former Treasury Secretary Herny Paulson to testify as well.
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Reader Comments (Page 1 of 2)
6-11-2009 @ 2:04PM
bobby said...
Why isn't anyone surprised.
It is the continuation of Obama and his party taking the United States to communism.
Some say it is socialism but what other socialistic country forces companies how to operate and what the operator of a company should earn.
Remember the latter, if you ever start your own company, they can tell you what you can earn.
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6-12-2009 @ 3:35AM
JR said...
Hmmmm..."Obama's Socialism" is what this is a sign of?
Civics 101, according to the Constitution the President-elect becomes President on january 20th of the following year.
kindergarten: Each new year begins on January 1st.
This article.....LAST YEAR...BoA was pressured into Merril Lynch deal.
Conclusion: either you are unaware that Bush was still President, or are unaware of when the new year begins.
Either way, you either lack an understanding of the constitution, or of the julian calendar, which is taught to 5 yr olds. Take your pick which.
6-11-2009 @ 3:21PM
patti said...
I believe completely the strong-armed tactics of this administration. Now they are threatening our First Ammendment privileges too. What next. We might as well be living in Russia.
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6-12-2009 @ 12:34AM
alex said...
to two idiots Bobby & Patty, get your facts before you open your mouth. Bernanke & Paulson were nominated by Bush adminisration, and BofA/Merrill deal was done prior to Obamas nomination.
P.S. I have lived in russia for many years it is a beautiful country
6-11-2009 @ 3:24PM
patti said...
I sent my comments but have not seen it posted. It said to click something but didn't know what that was.
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6-11-2009 @ 3:29PM
skids said...
this, dear folks, is the end game of the neocon greed machine, whose "conservative" (read corperatist) mantra had been accepted on "principle" by gullible americans desperate for sanity in washington since ronald reagan became the 1rst puppet. the idea was to bankrupt the government and therefore "we the people" that they may use thier ill gotten gains to consolidate thier wealth, and therefore power, at the expense of the middle class. there will be no more money for social programs, and the demand for still lower taxes and more corperate welfare will seem the only alternative. "we the people" have lost our country to the greed of the few.
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6-11-2009 @ 3:29PM
dano said...
Of course they were. But things are starting to turn against Obama. You can tell by the news stories that AOL is ignoring (mainly the 2.5 million lost jobs since February).
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6-11-2009 @ 3:34PM
Chuck said...
Didn't this all happen when Bush was still President and Paulson was Secretary of the Treasury? Were they leading down the road to that terrifying "communism"? I swear some people just need a boogy man to be paranoid about. It's really sad.
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6-11-2009 @ 3:41PM
sandy said...
YES! of course Lewis was threatened this is one giant power grab for Obama to get his hands on every single part of business. Banking, Insurance,Autos, now health care. Only 5 short months and he owns most of America and has bankrupted it to. Just think of what he will own of yours by next year? The middle class is going to get hammered next year in all sorts of taxes but the question will be, will they care? or won't they understand? The rich always pay leaders to stay rich ( both parties) and the poor don't have to pay at all. But all of you in the middle are going to get soaked dry. And don't say you weren't warned because the entire election you were warned. Good Luck when hyper-inflation takes hold and gas is $5.00 a gal as McCain warned it will go. GOOD LUCK BUT YOU WERE WARNED
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6-11-2009 @ 8:48PM
Eljayinvt said...
Seems a good many people have problems remembering the calendar - so eager to blame everything on the current administration that they ignore the fact that this all occurred during the Bush administration....
6-11-2009 @ 4:04PM
engineer04 said...
The whole thing borders on insider trading type of shenanigans what with the public and shareholder having been given no formal knowledge of the deal. Its called notice of acquisition via shareholder vote with complete accounting for all assets and debts included in the sale. They weren't. They didn't. That's- flat out, illegal. Its as simple as that. No one would ever do business if they weren't given the specifics of acquisitions. Hard to believe you people in here don't seem to get that. All you seem to argue about is the idiocy of who owns it now. THAT isn't the point. Idiots.
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6-11-2009 @ 4:34PM
Judy said...
WE, THE PEOPLE NEED TO TAKE BACK OUR COUNTRY. WE ARE HEADED FOR COMMUNISM ON A FAST TRAIN. CONTACT ALL YOUR CONGRESS MEMBERS, LET THEM KNOW IF THEY DON'T STOP THE SPENDING, STOP TAKING OVER INDEPENDENT COMPANIES, APPOINTING CSAR'S TO DECIDE PRIVATE COMPANYS SALARY'S, TRYING TO PASS SOCIALIZED HEALTH CARE, THAT WE WILL GET THEM OUT OF OFFICE. HERE IS THE CONTACT WEBSITE, DO IT NOW BEFORE IT IS TOO LATE. http://www.visi.com/juan/congress/
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6-11-2009 @ 4:41PM
john dumas said...
a bill of attainder tax, on a single company, passed only by the executive branch, without support of the shareholders, and its totally legal. How magical!
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6-11-2009 @ 4:57PM
tom Williams said...
Another ghost chasing committee. This Congress has to be the dumbest bunch of SOB's put on the planet. If Kucinich had a tail, he'd be chasing it.
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6-11-2009 @ 5:11PM
Doug said...
Hey, righties, these strong arm tactics happened under Cheney/Bush, not Obama. So what you are saying is the Cheney/Bush team are communists,/socialists/marxists. Jeeze, you guys can't do anything correctly, including getting mad at the right people. No wonder you keep losing.
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6-11-2009 @ 5:12PM
Robert said...
Sure -- blame Obama if you like, that's what everybody does.
But it was the Bush administration that made those threats. The Merrill acquisition was in the works, if not consummated, before Bush left office. Henry Paulson was Bush's treasury secretary. Why would a Republican congressman want to question Paulson if he weren't an instigator?
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6-11-2009 @ 5:18PM
Doug said...
Headline from Dec. 6, 2008: "Shareholders Approve Merril - BOFA Merger" . Go ahead, righty, say it. "OOPS". LOL Dumb as a truckload of bricks.
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6-11-2009 @ 5:28PM
steve said...
Perhaps if congress hadn't pressured banks to make loans to people who couldn't afford them. . .we wouldn't be in this mess.
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6-11-2009 @ 5:47PM
Joe said...
Bernanke should go to jail. If Martha Stewart had to go Ben should too. Sounds like Al Capone.
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6-12-2009 @ 5:18PM
Barb said...
I THINK IT IS TIME TO CANCEL THE AOL SERVICE. THERE ARE TOO MANY DEMENTIA AND ALZHEIMER PATIENTS ON AOL. GAS WAS NEARING FIVE $$ A GALLON LAST YEAR WHEN MCCAIN WAS TRYING TO GET INTO OFFICE AND OUR PRESIDENT'S NAME WAS BUSH NOT OBAMA. BUT LET'S BLAME OBAMA. I DO RECALL THAT BUSH WAS IN OFFICE FOR THE PAST EIGHT YEARS (2922 DAYS), BUT LET'S NOT PUT ANY BLAME ON HIM FOR THIS ECONOMIC BREAKDOWN. THE BAILOUT WAS ALSO BUSH, BUT LET'S BLAME OBAMA FOR THAT TOO. MAYBE I SHOULD START LISTENING TO BILL O AND SAVAGE AND RUSH. YOU NEED BETTER BRAINWASHING TECHNIQUES THAN THOSE 3 CLONES.
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