Documents released by Republicans paint a not-so-flattering portrait of federal regulators exerting pressure on Bank of America to conclude its deal with Merrill Lynch, even though the the deal was fast deteriorating. Bank of America CEO Ken Lewis testified that federal officials pressured him to the point that his job was at stake.
Reuters notes an email from Richmond Fed President Jeffrey Lacker that cites Fed Chairman Ben Bernanke on Lewis' belief that he could exercise a "material adverse change" (MAC) clause to scuttle the Merrill agreement. "Just had a long talk with Ben...Says they think the MAC threat is irrelevant because it's not credible. Also intends to make it even more clear that if they play that card and they need assistance, management is gone."
The New York Times suggests the government was alarmed as Merrill's condition weakened. They hashed out a plan to save Merrill in the event the deal fell through. The news coincides with the House Oversight and Government Reform Committee hearing today. It will feature Lewis as the sole witness and examine the deal.
For more:
- here's the Reuters article
- here's the New York Times article
![Reblog this post [with Zemanta]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_vI85va6Q3Ye65j5Ud49z-lgMPQtyqNhkyCjFdvy_Lh4duHgGaHdmckuCwiYzNU3dqH2PENn-9EEuXJWA1NF4YibV9dt8V0MFKk_xJBMiHggsBYzLrXzWqxRDba1SLwaXfB6DcYj4ZNpNNTkccmTIWw=s0-d)
