BofA’s CEO said goverment told him to keep quiet about Merrill Lynch

Kenneth Lewis, chief exec of Bank of America is claiming that Ben Bernanke, Federal Reserve chairman, and former Treasury dept. chief Henry Paulson pressured BofA not to talk about its plan to buy Merrill Lynch. Under oath, Lewis said that he believed Bernanke and Paulson were telling him to keep quiet about Merrill Lynch’s financial problems.

According to the Wall Street Journal’s review of the transcript:

Lewis said the federal government wanted him to keep quiet while the two sides negotiated government funding to help BofA absorb Merrill. BofA bought the troubled brokerage on Jan. 1 for $29.1 billion, including $8.6 billion in preferred stock. The deal resulted in BofA’s receiving an additional $20 billion in federal bailout funds under the Troubled Asset Relief Program.

According to the Journal, Lewis said Bernanke and Paulson told him the deal needed to be completed, otherwise it would “impose a big risk to the financial system” of the United States as a whole.

Since the acquisition of Merrill Lynch, Lewis has been under pressure from BofA shareholders for not disclosing how bad Merrill Lynch’s financial problems were.

To me this sounds like a cop-out from Lewis, next week he faces the annual shareholder’s meeting for BofA and he must really want to remain chairman and CEO, a position that the shareholders will likely split up.

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