BofA's (BAC) Lewis Suggests He Was Pressured By Bernanke and Paulson On Merrill Deal
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According to testimony from Bank of America's (NYSE: BAC) CEO Kenneth Lewis, Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson pressured him not to discuss some key details of its purchase of embattled brokerage firm Merrill Lynch.
Lewis told prosecutors that he believed Bernanke and Paulson were instructing him to keep silent about deepening financial difficulties at Merrill.
When asked by prosecutors if massive losses at Merrill should have been disclosed to shareholders, Ken Lewis said "It wasn't up to me."
Bernanke and Paulson warned Lewis that if the deal didn't get completed it would impose a big risk to the financial system.
Here is a section of the transcript from the Wall Street Journal:
- Q: Were you instructed not to tell your shareholders what the transaction was going to be?
A: I was instructed that 'We do not want a public disclosure.'
- Q: Who said that to you?
A: Paulson...
- Q: Had it been up to you would you [have] made the disclosure?
A: It wasn't up to me.
- Q: Had it been up to you.
A: It wasn't.
According to the Journal, which reviewed the full transcript, Mr. Lewis didn't say he was explicitly instructed to keep silent about the losses piling up at Merrill. But his testimony indicates that he believed the government wanted him to remain silent.
Link to WSJ Article
UPDATE: We are now getting some headlines out from the New York Attorney General's office. According to sources, Andrew Cuomo has sent a letter to regulators indicating that officials may have threatend to remove BofA's Board if the Merrill deal did not go through.
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