CHARLOTTE, N.C. — New York’s attorney general said Thursday government officials pressured Bank of America Corp. chief Ken Lewis to complete the bank’s purchase of Merrill Lynch, thus threatening his job security.
A letter from New York State Attorney General Andrew Cuomo’s office sent to Congressional leaders and federal regulators said Lewis testified in February that former Treasury Secretary Henry Paulson and Federal Reserve 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 completed its purchase of New York-based Merrill Lynch on Jan. 1.
The bank has repeatedly defended its acquisition to shareholders and investors amid revelations of huge losses at Merrill Lynch before the deal was done.
"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 had no immediate comment on the situation.
Bonuses questioned
Lewis’ testimony came in response to questioning by the attorney general’s office about bonuses paid to Merrill Lynch employees in December, 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 failed to provide adequate disclosure to shareholders about them.
The investigation’s focus has since broadened. The attorney general’s office continues to investigate the bonus payments, but is now also investigating potential securities fraud tied to Bank of America’s purchase of Merrill Lynch and whether enough transparency was provided on the deal.
Bank of America has received $45 billion from the government’s $700 billion Troubled Asset Relief Program (TARP). As part of that money, the bank received $20 billion in January after Lewis requested it to help offset mounting losses at Merrill.
Neil Barofsky, the special government inspector general assigned to oversee TARP, said Thursday he will be issuing audits of various bailout transactions, including government assistance provided to Charlotte, N.C.-based Bank of America in connection with its acquisition of Merrill Lynch. He said his office is also conducting an investigation involving the bank.
"I would caution anyone from leaping to too many conclusions about what Secretary Paulson or Chairman Bernanke said until we’ve looked at all the facts and reported on them,” Barofsky told the economic panel. "The conclusion that one may draw that it’s black and white that there was an order from the United States government not to disclose this information, I don’t think it’s as crystal clear.”
by the associated press
A letter from New York State Attorney General Andrew Cuomo’s office sent to Congressional leaders and federal regulators said Lewis testified in February that former Treasury Secretary Henry Paulson and Federal Reserve 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 completed its purchase of New York-based Merrill Lynch on Jan. 1.
The bank has repeatedly defended its acquisition to shareholders and investors amid revelations of huge losses at Merrill Lynch before the deal was done.
"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 had no immediate comment on the situation.
Bonuses questioned
Lewis’ testimony came in response to questioning by the attorney general’s office about bonuses paid to Merrill Lynch employees in December, 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 failed to provide adequate disclosure to shareholders about them.
The investigation’s focus has since broadened. The attorney general’s office continues to investigate the bonus payments, but is now also investigating potential securities fraud tied to Bank of America’s purchase of Merrill Lynch and whether enough transparency was provided on the deal.
Bank of America has received $45 billion from the government’s $700 billion Troubled Asset Relief Program (TARP). As part of that money, the bank received $20 billion in January after Lewis requested it to help offset mounting losses at Merrill.
Neil Barofsky, the special government inspector general assigned to oversee TARP, said Thursday he will be issuing audits of various bailout transactions, including government assistance provided to Charlotte, N.C.-based Bank of America in connection with its acquisition of Merrill Lynch. He said his office is also conducting an investigation involving the bank.
"I would caution anyone from leaping to too many conclusions about what Secretary Paulson or Chairman Bernanke said until we’ve looked at all the facts and reported on them,” Barofsky told the economic panel. "The conclusion that one may draw that it’s black and white that there was an order from the United States government not to disclose this information, I don’t think it’s as crystal clear.”
by the associated press
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