Paulson Threatened to Oust Lewis, BofA Board

Bank of America wanted to pull out of its deal with a fast-sinking Merrill Lynch last year but changed course after then-Treasury chief Henry Paulson threatened to oust CEO Ken Lewis and the entire BofA board, the Wall Street Journal reports. The revelation came in a letter to members of Congress from New York AG Andrew Cuomo, who's investigating the merger. He called for federal regulators to investigate the US pressure.

Lewis told Paulson in December that the bank intended to invoke a clause to get out of the deal because Merrill's precarious finances had taken a disastrous turn. Paulson, at the behest of Ben Bernanke, told him the feds "could or would" replace the bank's management team, then discussed the possibility of more government aid. "Lewis admits that Secretary Paulson's threat changed his mind about invoking the MAC clause and terminating the deal," Cuomo said. (More Ken Lewis stories.)