B of A Chief to face Congressional Committe re: Merrill deal
Bank of America CEO Ken Lewis is scheduled to testify today before Congress on the bank's acquisition of Merrill Lynch. WFAE's Simone Orendain reports: A House Oversight Committee spokeswoman says members are looking for more details on how the two-day long deal to acquire Merrill Lynch went down. The committee wants to know whether financial regulators pressured Bank of America's Ken Lewis into completing the $50 billion dollar transaction. In testimony this spring to the New York attorney general, Lewis said he wanted to back out of the deal after he learned that Merrill's losses were greater than anticipated. He said then-Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke told him to complete it or else he and the bank's board would lose their jobs. Lewis also testified the regulators told him not to disclose Merrill's financial troubles to shareholders. UNC Charlotte Banking Professor Tony Plath says if it turns out Lewis was right, the hearing will have serious implications. "It is a significant event in bank regulatory history because it does look as if regulators significantly overstepped the boundaries of prudent and proper regulation. If they did ask the bank to withhold material and financial information, in effect, they violated SEC law," says Plath. The committee subpoenaed numerous documents from the Federal Reserve in preparation for the hearing. A B of A spokesman says Lewis looks forward to testifying before the committee.