Lewis testified that U.S. urged silence on Merrill deal: report
Written on April 24, 2009
Bank of America Corp Chief Executive Kenneth Lewis testified under oath that U.S. Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson pressured the bank to not discuss its plan to buy Merrill Lynch & Co, the Wall Street Journal said.
In a testimony before New York’s attorney general Andrew Cuomo in February, Lewis told prosecutors that he believed Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, which BofA acquired in January.
Lewis testified that the government wanted him to remain silent while the two sides negotiated government funding to help BofA absorb Merrill and its losses, the paper said, citing transcripts of the testimony.
A representative of Cuomo questioned Lewis about his failure to disclose Merrill’s fourth-quarter losses, which eventually totaled $15.84 billion, according to the paper.
Lewis said he was told by Bernanke and Paulson that the BofA-Merrill deal needed to be completed, otherwise it would “impose a big risk to the financial system” of the United States as a whole, according to the paper fast payday loans.
A person in government familiar with Bernanke’s conversations with Lewis told the paper that the Fed chairman did not offer the BofA chief advice on the question of disclosure, and suggested that Lewis consult his own counsel.
Paulson repeatedly told Lewis that “the U.S. government was committed to ensuring that no systemically important financial institution would fail,” the Journal cited the former Treasury Secretary’s spokeswoman as saying.
A BofA spokesman told the paper that the bank “had no legal obligation to disclose ongoing negotiations with the government and disclosure of ongoing negotiations likely would have severely disrupted the global financial markets and damaged the bank.”
BofA did not immediately respond to a Reuters email seeking comment that was sent outside of normal business hours.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by Muralikumar Anantharaman)
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