Former Bank of America CEO Ken Lewis is being sued by New York Attorney General Andrew Cumo on allegations of fraud related to its purchase of Merrill Lynch, according to media reports.
Cuomo has engaged in a widespread investigation of Bank of America's controversial purchase of Merrill Lynch. The purchase has also been the focal point of congressional inquiries.
“We believe the bank management understated the Merrill Lynch losses to shareholders, then they overstated their ability to terminate their agreement to secure $20 billion of TARP money, and that is just a fraud,” Cuomo said at a press conference. “Bank of America and its officials defrauded the government and the taxpayers at a very difficult time.”
The suit against Lewis comes as populist rancor has risen against the banking industry and the Obama administration's economic advisers due to the ongoing economic recession and high unemployment.
The Senate last week voted to confirm Federal Reserve Chairman Ben Bernanke. but not before his renomination became uncertain in the week leading up to the vote. 30 senators voted against Bernanke, the largest number of senators ever to vote against a Fed chairman.
Under Lewis' leadership, Bank of America received $20 billion in federal dollars under the Troubled Asset Relief Program. Lewis stepped down as CEO in 2009.
Bank of America purchased Merrill for $50 billion in at the height of the financial crisis in 2008 just as the firm was about to collapse. The company's former chief financial officer, Joseph Price, was also named in the suit.
Cuomo brought the suit under a New York securities law that allows both criminal and civil penalties.
A Bank of America spokesperson told CNN that the suit is "totally without merit."