Accessibility links

US May Have Forced Top Bank to Act


A top U.S. bank may have been forced to acquire a collapsing investment firm in order to prevent the financial crisis from getting worse.

The allegations by Bank of America Chief Executive Ken Lewis are detailed in a letter to U.S. lawmakers from the top legal officer for the state of New York.

Merrill Lynch was on the verge of collapse when Bank of America first agreed to acquire the investment firm last year. But according to the letter, Lewis said he was threatened by former Treasury Secretary Henry Paulson and Federal Reserve (U.S. central bank) Chairman Ben Bernanke when he wanted to legally cancel the deal.

Lewis said he was told the U.S. government would seek his removal as Bank of America's CEO if he failed to complete the acquisition.

New York Attorney General Andrew Cuomo said Paulson "largely corroborated" the story.

A government source denied the Federal Reserve gave any advice to Bank of America.

Lewis said he changed his mind about the deal after he learned Merrill Lynch had billions of dollars in losses that it had failed to report.

The government had already given Bank of America $25 billion in emergency aid before the merger with Merrill Lynch. After the merger, the government gave Bank of America an additional $20 billion.

Some Bank of America shareholders upset with the merger have been calling for Lewis to be removed.


Some information for this report was provided by AP and Reuters.

XS
SM
MD
LG