Bank of America's Takeover of Merill Lynch

Note: Acquisition, takeover and buyout are all synonymous. Bank of America's purchase of Merrill Lynch has also been referred to as a merger but this is inaccurate at best; Bank of America's management took over all assets and control.

1. April 23, 2009: Bank of America CEO Ken Lewis Testifies That Henry Paulson Threatened to Have Everyone on Bank of America's Board of Directors Forcibly Removed From Their Positions

Bank of America CEO Says He Was Pressured Into Merrill Rescue; Ken Lewis Says Former Treasury Secretary Henry Paulson Threatened to Remove Board
ABC News, Richard Esposito, Betsy Stark and Charles Herman

"The CEO and Chairman of Bank of America says he was threatened by the Bush Administration's Secretary of Treasury when he tried to back out of a deal to rescue Merrill Lynch, according to testimony he gave to New York Attorney General Andrew Cuomo.

The stunning disclosures of a behind the scenes power play by top government officials are the talk of Wall Street and Washington today.

In his testimony, Bank of America CEO Ken Lewis told New York's Attorney General that then-Treasury Secretary Henry Paulson threatened him on December 21st with the prospect of removing the management and Board of Directors of the bank if Lewis refused to complete the merger with Merrill Lynch even though Merrill was hemorrhaging money."


"The documents [that New York Attorney General Andrew Cuomo made public] lay out in detail a troubling set of conversations, emails, and meetings in which federal regulators and senior bank officials admit that they agreed not to alert shareholders at Bank of America to circumstances that could materially affect their investments, admitted not having alerted the Securities and Exchange Commission to discussions which came within its regulatory scope, and in which Lewis, the Chief Executive Officer of a bank, admits he went forward with a deal knowing full well that it could have a negative impact on a large number of shareholders.


According to the Cuomo letter, when Lewis first learned of the "staggering amount of deterioration" at Merrill on December 14th and had decided it might warrant cancelling the deal, he notified Paulson and the Treasury Secretary asked him to fly to Washington that night.

There he met with Paulson and senior officials including Chairman of the Federal Reserve Ben Bernanke, and was asked "to not seek to rescind the merger agreement."

But his bank came under pressure from the government in a series of follow-ups to the meeting and Lewis after attempting to resist, appears to have caved.


On December 21st, when Lewis still considered using a "material adverse event" clause to squash the deal, he told Cuomo, according to the letter [Cuomo wrote and mailed to government officials], that Paulson threatened to remove the management and Board of Directors of Bank of America. That ended Bank of America's attempts to exit the deal, the letter stated.



• During his term, Treasury Secretary Henry Paulson Used Threats to Ensure That Bank of America Would Takeover Merrill Lynch.

• Ben Bernanke Used Threats & Bribery to Ensure That Bank of America Would Takeover Merrill Lynch.

• The CEO of Bank of America, Ken Lewis, Illegally Withheld Vital Information from Shareholders.

• Federal Reserve Emails, Obtained By a House Oversight and Government Reform Committee Subpoena, Discuss How Best to Keep the OCC and the SEC in the Dark Regarding The Takeover Deal. The Emails Also Show that Bank of America Complained About Someone at the Federal Reserve Having Talked to the SEC About the Takeover Deal.

Note: The "MAC clause" in the Bank of America contract with Merill Lynch allowed Bank of America to avoid taking over Merill Lynch because of their losing $12 Billion. The "MAC threat" is Bank of America's message to the Federal Reserve that they were considering using the MAC clause to avoid taking over the failing company.




• Former Treasury Secretary Henry Paulson testified that Ben Bernanke instructed him to tell Bank of America's Board that they would all be fired if they backed out of the Merrill Lynch deal. Ben Bernanke denied this. Go to 1:10 of the following video and listen to Bernanke's denial. Listen to the sound of Bernanke's voice at 1:32.

Congressman Towns (D-NY) Questions Ben Bernanke

• In an email obtained by subpoena, Jeffrey Lacker (President of the Federal Reserve Bank of Richmond) wrote that Ben Bernanke told him that if Bank of America did not takeover Merill Lynch and then needed assistance "management is gone". Ben Bernanke testified that he never said that but at the same time refused to say that Jeffery Lacker was incorrect in believing that he did. Go to :47 of the following video to hear the questioning and Ben Bernanke's response.

Congressman Issa (R-CA) Questions Ben Bernanke

• On July 9th 2009 Ken Lewis