Bernanke to testify on Bank of America-Merrill deal

CHARLOTTE -- Federal Reserve Chairman Ben Bernanke is scheduled to testify before a House Committee June 25 about allegations that he was pressed to buy Merrill Lynch after becoming aware of major losses at the investment bank.

The House Oversight and Government Reform Committee says in a letter to Bernanke that it is seeking information about what role the federal government played in the decision to provide the bank with money to buy Merrill Lynch.

Last week, Bank of America CEO Kenneth Lewis, who brought forth the allegations, testified before Congress defending his rationale in buying Merrill Lynch. Lewis also said publicly for the first time that he was pressured into going through with the deal.

A spokesman for Bank of America declined to comment Wednesday.

Investors have been upset over a tremendous drop in Bank of America's stock price, continuing losses and government investigations surrounding the company's acquisition of Merrill Lynch.

In April, shareholders stripped Lewis of his chairman's title, and the bank said it was looking for new directors. Walter Massey, president emeritus of Morehouse College in Atlanta, was elected by BofA's board to replace Lewis as chairman.

The bank has since had four directors leave and has appointed four new ones.

BofA received $45 billion in taxpayer money since the start of the financial crisis last fall, part of which was provided to help the bank manage massive losses incurred by Merrill Lynch.

Last month, the government told Bank of America that it should raise $33.9 billion in capital to boost its reserves in case the economy worsens. As part of its stress tests of the 19 largest U.S. banks, the government said Bank of America needed the most additional cash.

So far, the bank has raised nearly $33 billion and said it expects to top the government's required amount.