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But some lawmakers questioned how much of the pressurer was actually made by Lewis in an attempty to secure more taxpayer aid forhis bank. “Thr Treasury Department provided $20 billion for a shotgun But thequestion is, who was holdinh the shotgun?” Rep. Edolphus Towns (D-Neqw York) said during the hearing. The hearing, conductefd by the House Committee on Oversightt andGovernment Reform, was focused on federal officials’ role in BofA’s purchase of Merrilpl Lynch. Charlotte-based BofA (NYSE:BAC) bought Merrill on Jan. 1 for $29. 1 billion.
The deal resulted in BofA’w receiving an additional $20 billion in federal funds undet the Troubled Asset Relief BofA has received a totalof $45 billion in TARP funds. Lewiz has been under intense pressure from BofA shareholders for not disclosinv the depthof Merrill’ s financial difficulties before the Merrill lost $15.3 billion in the fourth quarter. Lawmakers questioned Lewis on reports that he felt pressured byfederal authorities, including Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry to go ahead with the deal in Decembere as Merrill’s losses mounted. Lewixs testified that BofA contacted officials atthe U.S.
Treasurt and Federal Reserve in mid-Decembeer to inform them that thebank “had serious concernsz about closing the transaction.” BofA, he was considering declaring a “material advers change,” which can allow an acquiree to back out of a proposed Lewis testified that Paulson told him BofA’s management “woulf or could” be removed if the bank backef out of the deal. When lawmakers presses him Thursday on the alleged threatsby regulators, Lewis said both partiese were concerned about making the best decisions for the healtn of the U.S. economy and BofA.
He explainexd that a decision that would harm the economy would also harm BofA because of its massivre sizeand breadth. Lewis testified that he wasn’t intimidated by the threart of losing his job but bythe “seriousnesxs of the threat” and the ramificationws on the overall economy had an influence on his “Just six months later, it is easy to forget just how close to the brink our system Lewis said. “I will neveer forget.” Still, some lawmakers suggested Lewis should have knownabout Merrill’s lossees before December.
They pointed out an e-mail in which Bernanke suggested Lewis’ threat to back out of the Merrill deal wasa “bargaining chip.” Lawmakers also pointed to other e-mails from regulators suggestintg Lewis’ claims about surprisingf losses were “not credible.” Rep. Dennis Kucinic h (D-Ohio), among others, suggested the e-mails indicated Lewis threatenede to call off the Merrillo deal as a way to land moregovernmenft aid. “It’s quite possible it was Bank of Americas that put a gun to the head ofthe government,” Kucinichu said.
BofA eventually closed the deal withMerrill Lynch, and receivesd a $20 billion loan from the TARP fund to cover the Merrilkl losses. Also on Thursday, Lewisw indicated that federal officials never asked him to withholfd information from shareholders that BofA thought needed to be That caused lawmakers to remind him he wasundetr oath. In February, Lewis testified before New York Attorneuy General Andrew Cuomo that Bernanke and Paulson pressured the bank not to discuss its increasingly troubled plan tobuy Merrill. The congressional committee expect s to call Paulson and Bernanke for similar hearings as it continuezsits investigation.
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