New York’s attorney general said today government officials pressured Bank of America Corp.’s CEO Ken Lewis to complete the bank’s purchase of Merrill Lynch and threatened his job security.
A letter from New York Attorney General Andrew Cuomo’s office sent today to Congressional leaders and federal regulators said Lewis testified in February that former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke threatened to oust Bank of America’s management if the bank tried to back out of buying Merrill Lynch.
The government helped orchestrate the acquisition of the investment bank by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under, setting off one of the most intense periods of the financial crisis.
Bank of America acquired New York-based Merrill Lynch on Jan. 1.
The bank has repeatedly defended its purchase to shareholders and investors amid revelations of huge losses at Merrill Lynch before completion of the deal.
“We believe we acted legally and appropriately with regard to the Merrill Lynch transaction,” Bank of America spokesman Scott Silvestri told The Associated Press Thursday.
Representatives from the Treasury Department and the Fed had no immediate comment.
The February testimony came in response to questioning by the attorney general’s office about bonuses paid to Merrill Lynch employees in December, just before BofA completed its acquisition of the investment bank. The attorney general’s office was trying to determine the timing of the bonuses and whether BofA had failed to provide adequate disclosure to shareholders about them before the deal was completed.
The investigation’s focus has since broadened to encompass the transparency of the government’s $700 billion bailout program, which it launched last fall to help unclog credit markets.
Bank of America has received $45 billion from the government’s Troubled Asset Relief Program. As part of that money, the bank received $20 billion in January after Lewis requested it to help offset mounting losses at Merrill Lynch. (AP)
