TEXT OF INTERVIEW
A judge in New York is refusing to let a settlement go forward between Bank of America and the Securities and Exchange Commission. The $33 million deal was agreed to earlier this week to settle complaints about B of A misleading its shareholders about the bonuses Merrill Lynch was paying its employees. Marketplace’s Jeremy Hobson is with us live from New York
Jeremy Hobson: Good morning Bill.
Radke: OK. Let’s start with the B of A-Merrill Lynch last September.
Hobson: OK. Well Bank of America, as you’ll remember, agreed to take over Merrill Lynch last September that weekend that Lehman Brothers collapsed. And it was seen as a big boost of confidence to the financial system to have one bank agreeing to take over another one while there was all this uncertainty. It was pushed — now there’s debate about how much, but it was definitely pushed by the government — and you’ve got to think of B of A as sort of the Wal-Mart of banks and Merrill as the Saks 5th Avenue, they pay their people very well, and they wanted to pay about $6 billion in bonuses at the end of last year after Bank of America took over.
Radke: And Bank of America told shareholders that these Merrill bonuses were not go through without B of A’s say-so?
Hobson: Right, and they said that bank in November — allegedly they said that back in November — right before the shareholders had to vote on the deal. Now according to the SEC, Bank of America had already agreed to pay these bonuses, but did not disclose that information to shareholders. So Bank of America settled with the SEC, as you said earlier this week, and agreed to pay a $33 million penalty.
Radke: And now this judge is saying no to that?
Hobson: Right, he’s saying not so fast — the public has a right to know what went on here. And also he questioned whether the $33 million is going to come from the $45 billion B of A got from the government bailout. So the hearing is scheduled for Monday and we’ll find out what happens next then.
Radke: Marketplace’s Jeremy Hobson. Thank you.
Hobson: Thank you.