Hill Panel Probes BofA Deal

By Justin Rood

Jun 9, 2009 5:22pm

 Hill Panel Probes BofA Deal (with Matt Jaffe) Remember the controversy over the Bank of America/Merrill Lynch merger?  BofA chairman Ken Lewis said in April he bought Merrill only after threats from the Bush administration.

A House investigative panel is making noises about getting aggressive in their search for more answers. For starters, they’ve dragged Lewis up to testify tomorrow.


And they fired off a subpoena to the Fed for documents, which is hardly the way the august and genteel institution is used to being treated by anyone, much less Congress. (Fed spokesman: “We expect to respond to the subpoena completely and fully as requested.”)

According to a copy of Lewis’ testimony obtained by ABC News, the BofA honcho is planning to dial back a bit his earlier comments that he might not have done the deal had Bush Treasury Secretary Hank Paulson not threatened to dump the bank’s management and board of directors if they tried to pull out.

Before the House Oversight and Government Reform Committee, Lewis appears ready to reset the applecart: “Treasury and Federal Reserve representatives. . . expressed significant concerns about the systemic consequences and risk to Bank of America”, Lewis says in his testimony. In the end, the CEO says, he closed the purchase because it “made sense for Bank of America and its shareholders.”

Indeed, with the dust settled there’s now a higher degree of kumbaya: “I believe that committed people of good intentions, in both the private sector and the government, worked desperately hard in late 2008 to prevent a collapse of the global financial system,” Lewis says.

We’ll see how long that holds up — the panel has something of a good time taking shots at financial wizards. It was before the same committee that former TARP director Neel Kashkari got called a “chump,” and was thoroughly chewed out by the typically mild-mannered Rep. Dennis Kucinich (D-OH) over a separate bank merger.

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