Bank of America CEO Says He Was Pressured Into Merrill Rescue
Ken Lewis says former Treasury Secretary Paulson threatened to remove board.
April 23, 2009— -- The CEO and Chairman of Bank of America says he was threatened by the Bush Administration's Secretary of Treasury when he tried to back out of a deal to rescue Merrill Lynch, according to testimony he gave to New York Attorney General Andrew Cuomo .
The stunning disclosures of a behind the scenes power play by top government officials are the talk of Wall Street and Washington today.
In his testimony, Bank of America CEO Ken Lewis told New York's Attorney General that then-Treasury Secretary Henry Paulson threatened him on December 21st with the prospect of removing the management and Board of Directors of the bank if Lewis refused to complete the merger with Merrill Lynch even though Merrill was hemorrhaging money.
Just a few days earlier, on December 14th, Lewis's Chief Financial Officer had told him that Merrill's projected fourth quarter losses had "skyrocketed" from $9 billion to $12 billion in just six days, according to a cover letter Cuomo sent along with the testimony and other documents to senior government officials overseeing the bank bailout.
The letter and the testimony was sent to the Chairman of the Senate Banking Committee, the Chairman of the House Financial Services Committee, the Chairman of the Securities and Exchange Commission and the Chair of the Congressional Oversight Panel.
Senator Chris Dodd (D-CT), chairman of the Senate Banking Committee is "deeply concerned about these troubling allegations," according to his office. "He has talked today with Attorney General Cuomo about his findings and will carefully assess the documents provided to him by the Attorney General. He will decide on next steps soon," said Dodd's spokesperson, Justine Sessions.
The Congressional Oversight Panel would not comment on the letter, saying they have yet to 'formally' receive it.
Cuomo said he sent the information because of serious concerns about the transparency with which the Troubled Assets Relief Program and other elements of the federal bailout plan are being run, because of his office's responsibility to enforce the securities laws, and because of the "unprecedented circumstances" in which the Merrill – Bank of America merger took place.
