Bank of America ‘Threatened’ over Merrill Lynch Deal
23/25 Apr 09 | FT
Bank of America’s chief executive, Ken Lewis, only agreed to complete the acquisition of Merrill Lynch after US federal regulators threatened to oust him and his board if BofA walked away from the deal, New York’s attorney-general said on Thursday in a letter to federal officials.
Andrew Cuomo, New York’s top law officer, quoted Mr Lewis as saying that in December, when mounting losses at Merrill caused him to reconsider the acquisition, Hank Paulson, then US Treasury secretary, warned that a failed deal could destabilise the financial system.
At that time, US officials feared that the failure of another Wall Street investment bank could cause panic among investors. The earlier collapse of Lehman Brothers had sent shockwaves through financial markets.
In a deposition in February, Mr Lewis said that Mr Paulson had told him that “we feel so strongly that we would remove the board and management” of BofA if it pulled out of the deal. Mr Cuomo’s letter described Mr Paulson’s remarks as a “threat”. >>>
Hank Paulson, former US Treasury secretary, and Ben Bernanke, Federal Reserve chairman, were yesterday under scrutiny following disclosures about their alleged roles in putting pressure on Bank of America to complete its acquisition of Merrill Lynch, the troubled investment bank. >>>