House lawmakers this week will use newly released internal documents to dig into Bank of America’s controversial acquisition of Merrill Lynch.
Bank of America last week reached an agreement with federal regulators to release internal documents on the deal that are being provided to staff on the House Committee on Oversight and Government Reform.
Committee Chairman Edolphus Towns (D-N.Y.), ranking member Rep. Darrell Issa (R-Calif.) and Rep. Dennis Kucinich (D-Ohio) have led the investigation.
Bank of America in December was considering invoking a legal clause that would have ended the deal with Merrill. Treasury and Fed officials have testified that they believed that had the potential to further destabilize the financial system and harm Bank of America. Merrill was facing more than $15 billion in losses.
But investigators have questioned whether federal officials threatened to remove bank management if the deal did not proceed. The deal was completed in January 2009.
Also at issue is whether federal officials ever committed to providing additional money from the $700 billion bailout to support Bank of America. The bank has received a total of $45 billion from the bailout program.
Committee lawmakers are also looking into the role of now-Treasury Secretary Timothy Geithner and Lawrence Summers, now the top economic adviser to President Barack ObamaBarack ObamaObama promotes bipartisan cures bill Confirm Scott Palk for the Western District of Oklahoma Dean drifts behind in DNC race MORE. According to a December document obtained by The Hill, bank executives believed that Geithner and Summers agreed to the deal with federal officials at the Treasury Department and Federal Reserve. The document includes talking points for a conversation between the bank’s CEO, Kenneth Lewis, and the firm’s board.
The document said that then-Treasury Secretary Hank Paulson made it clear that the Treasury and Fed were “prepared to deliver an assistance package that would include equity and loss protection.” The document also summarized a December conversation between the bank and Fed Chairman Ben Bernanke. According to the document, Bernanke said, “Geither and, in addition, Larry Summers, were both on board with the transaction.”
The bank official who circulated the talking points wrote in an e-mail preface to the document that some of the statements were characterizations.
“Some of the characterizations of what Hank or Ben said are from our notes so we may not have the exact thoughts correctly stated but we tried to catch the gist of the conversations,” the e-mail reads.
Republicans are continuing to hammer Fed and Treasury officials for organizing a “shotgun wedding” between the banks.
“The Bank of America-Merrill Lynch merger was the outcome of a collaborative effort orchestrated by Ken Lewis, Henry Paulson, Ben Bernanke, Timothy Geithner and Larry Summers,” said Kurt Bardella, spokesman for Issa.