U.S. Forced Bank Board To Carry Out Merrill Deal
In Inquiry Into Merger, Cuomo Details Pressure On Bank of America
By David Cho and Tomoeh Murakami Tse
Washington Post Staff Writers
Friday, April 24, 2009
NEW YORK, April 23 -- Federal Reserve Chairman Ben S. Bernanke and former Treasury secretary Henry M. Paulson Jr. threatened to remove the management and board of Bank of America if it backed out of its deal to acquire ailing investment house Merrill Lynch late last year, according to documents released yesterday by New York Attorney General Andrew M. Cuomo.
Kenneth Lewis, Bank of America's chief executive, told investigators he wanted to stop the merger because "devastating losses" at Merrill would be detrimental to his company, the documents show. But the threat from Paulson changed his mind, he told the attorney general's office.
Paulson said he made the threat at the request of Bernanke, according to the documents, out of concern about the danger to the wider financial system.
Lewis did not immediately inform shareholders about the losses at Merrill or the pressure from the federal government. Several prominent shareholder groups say this violated securities laws requiring the disclosure of information, and they are campaigning to unseat Lewis at the company's annual meeting Wednesday.
(More here.)
By David Cho and Tomoeh Murakami Tse
Washington Post Staff Writers
Friday, April 24, 2009
NEW YORK, April 23 -- Federal Reserve Chairman Ben S. Bernanke and former Treasury secretary Henry M. Paulson Jr. threatened to remove the management and board of Bank of America if it backed out of its deal to acquire ailing investment house Merrill Lynch late last year, according to documents released yesterday by New York Attorney General Andrew M. Cuomo.
Kenneth Lewis, Bank of America's chief executive, told investigators he wanted to stop the merger because "devastating losses" at Merrill would be detrimental to his company, the documents show. But the threat from Paulson changed his mind, he told the attorney general's office.
Paulson said he made the threat at the request of Bernanke, according to the documents, out of concern about the danger to the wider financial system.
Lewis did not immediately inform shareholders about the losses at Merrill or the pressure from the federal government. Several prominent shareholder groups say this violated securities laws requiring the disclosure of information, and they are campaigning to unseat Lewis at the company's annual meeting Wednesday.
(More here.)
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