Lewis testifies on Merrill Lynch deal
TEXT OF STORY
Steve Chiotakis: The head of Bank of America faces a fresh grilling before a congressional panel today. Kenneth Lewis has been under fire from stockholders. who complain that he failed to disclose the depth of Merrill Lynch’s financial troubles when B of A took over the brokerage late last year. Here’s our senior business correspondent Bob Moon.
Bob Moon: It’s beginning to sound like the U.S. government’s efforts to head off a global financial collapse last September had all the markings of a scene from Mission Impossible.
MISSION IMPOSSIBLE CLIP: The secretary will disavow all knowledge of your actions.
Kenneth Lewis suggests that kind of scenario in testimony he’s prepared for lawmakers today. The B of A chief claims former Treasury Secretary Henry Paulson and Fed chief Ben Bernanke pressured him to go through with the deal for Merrill Lynch. Lewis says he had serious second thoughts over what he now calls “significant accelerating losses” at the brokerage.
Secretary Paulson has said he left it up to Lewis whether to disclose his doubts to B of A investors. What lawmakers want to know is why, then, did Lewis sign off on the deal with this kind of enthusiastic pitch to his stockholders?
Kenneth Lewis: This was a unique opportunity to acquire a high-quality company that will not only greatly enhance our long-term prospects, but truly creates a firm that is unparalleled in the industry.
Emails turned up by congressional investigators, as reported by the Wall Street Journal, appear to support Lewis’s claim that he felt pressured by top government officials to put the best face on the deal.
I’m Bob Moon for Marketplace.
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