BofA CEO Says Feds Urged Silence on Merrill Losses

Shareholders kept in the dark to ensure deal
By Clay Dillow,  Newser Staff
Posted Apr 23, 2009 7:36 AM CDT
In this Feb. 11, 2009 file photo, Bank of America Chairman and Chief Executive Officer Ken Lewis testifies on Capitol Hill in Washington before the House Financial Services Committee.   (AP Photo/Haraz N. Ghanbari, file)
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(Newser) – Bank of America's CEO felt pressured by Fed Chairman Ben Bernanke and Treasury chief Henry Paulson to withhold details of last year's Merrill Lynch acquisition from shareholders, including mounting losses at Merrill that triggered a $20 billion bailout, the Wall Street Journal reports. BofA CEO Ken Lewis said in testimony examined by the Journal that he believed regulators wanted him to keep quiet about Merrill’s $15.84 billion fourth-quarter losses so shareholders wouldn’t block the deal.

"It wasn't up to me," Lewis said when asked by the New York attorney general's office whether shareholders should have been told. Though he said he wasn’t explicitly instructed to deceive them, he claims the regulators—specifically Paulson—made it clear that the deal was critical for the economy and he would be removed if it fell through.