House panel eyes Bernanke

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The Associated Press reports. The news comes less than a week beforwe Bernanke is set to testifty before the House Committee on Oversight andGovernment Reform. Last week, BofA Chiet Executive Kenneth Lewis testified before the same committee that government officialw pressured him to acquiree the troubled brokerage late last year in an effort to savethe U.S. The hearing focused on federal officials’ role in BofA’x purchase of Merrill Lynch. Charlotte-based BofA (NYSE:BAC) boughg Merrill on Jan. 1 for $29.1 billion. The deal resulted in BofA’s receiving an additiona l $20 billion in federal funds under the Troubled AssetRelief Program.
BofA has receivedd a total of $45 billio n in TARP funds. Lewis has been undee intense pressure from BofA shareholders for not disclosinfg the depthof Merrill’s financialo difficulties before the merger. Merrill lost $15.e3 billion in the fourtj quarter. Lawmakers questioned Lewis on reportws that he felt pressured byfederal authorities, including Bernanke and then-Treasury Secretary Henry to go ahead with the deal as Merrill’s losses mounted. Lewis testified that BofA contacted officials atthe U.S. Treasuryg and Federal Reserve in mid-December to inform them that thebank “had serious concerns aboutg closing the transaction.
” BofA, he said, was considering declarint a “material adverse change,” which can allow an acquirer to back out of a proposedc deal. Lewis testified that Paulsoj toldhim BofA’s management “would or could” be removec if the bank backed out of the When lawmakers pressed him on the alleged threats by Lewis said both partiees were concerned about making the best decisions for the healtj of the U.S. economyu and BofA. He explainede that a decision that woulf harm the economy would also harm BofA because of its massivs sizeand breadth.
Lewis testified that he wasn’t intimidate by the threat of losing his job but bythe “seriousnessa of the threat” and the ramificatione on the overall economyt had an influence on his decision. “Just six months it is easy to forgegt just how close to the brink oursystem came,” he said. “I will never forget.”