Breaking in this morning's Wall Street Journal, we have this, "
Lewis Testifies U.S. Urged Silence on Deal," wherein Bank of America CEO Ken Lewis, in testimony to NY Attorney General Andrew Cuomo in February, all but implies that Bush Treasury Secretary Henry Paulson and Fed Chair Ben Bernanke "encouraged" (some might say: "conspired with") him to commit securities fraud. Apparently, per reports at the time and as they relate to today's story, the government-sponsored shotgun wedding between Merrill Lynch and Bank of America, engineered by Paulson and Bernanke back in the Fall of 2008, was rife with public misrepresentations and obfuscations about the (actual) dire financial condition of Merrill, and consequently, of the adverse impact it would have on BofA's bottom line (and stock price).
Back in January, providing context to the matter, we have this article from Reuters: "
BofA silence on Merrill losses may prompt lawsuits."
BofA silence on Merrill losses may prompt lawsuits
Fri Jan 16, 2009 6:52pm EST
By Paritosh Bansal and Jonathan Stempel - Analysis
NEW YORK (Reuters) - Bank of America Corp's disclosure of massive new losses from its purchase of Merrill Lynch has lawyers asking: what did the bank know and when?
If the bank's management and board are shown to have failed to disclose critical information to shareholders in a timely manner, they could face lawsuits, legal experts said.
The January article tells us that Lewis was sought bailout funds from the government, because the general sense was that Merrill was in very bad shape. As we learn from this article, BofA was ready to walk away from the deal. But, that all happened after December 5th, 2008, when both companies approved the merger.
In Bank of America's January 1 announcement that the merger had closed, Lewis made no mention of the losses. Instead, he said the combined company -- faced with those losses and without a final commitment from the government to cover some of them -- was "uniquely positioned to win market share and expand our leadership position in markets around the world."
--SNIP--
Legal experts said the absence of more disclosure about Merrill's troubles might lead to shareholder lawsuits, but they believe Bank of America may have a defense if it needed to keep the talks for government support private.
--SNIP--
A lawsuit against the bank could allege securities fraud and negligence for not disclosing the information about Merrill's expected losses, including in the documentation sent to shareholders eligible to vote on the deal.
Per a story running now on Reuters about this morning's WSJ article (if you don't have a paid subscription to the WSJ, you can't read the article), Ken Lewis testified in February under oath before NY State Attorney General Andrew Cuomo that "...Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson pressured the bank to not discuss its plan to buy Merrill Lynch & Co..."
Lewis testified that U.S. urged silence on Merrill deal
Thu Apr 23, 2009 1:28am EDT
(Reuters) - Bank of America Corp Chief Executive Kenneth Lewis testified under oath that U.S. Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson pressured the bank to not discuss its plan to buy Merrill Lynch & Co, the Wall Street Journal said.
In a testimony before New York's attorney general Andrew Cuomo in February, Lewis told prosecutors that he believed Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, which BofA acquired in January.
Lewis testified that the government wanted him to remain silent while the two sides negotiated government funding to help BofA absorb Merrill and its losses, the paper said, citing transcripts of the testimony.
--SNIP--
Lewis said he was told by Bernanke and Paulson that the BofA-Merrill deal needed to be completed, otherwise it would "impose a big risk to the financial system" of the United States as a whole, according to the paper.
And, as we also learn in this article, the finger-pointing has officially begun ...in public.
A person in government familiar with Bernanke's conversations with Lewis told the paper that the Fed chairman did not offer the BofA chief advice on the question of disclosure, and suggested that Lewis consult his own counsel.
Oh, yeah...that's an Office of Thrift Supervision scandal, 20 ongoing TARP fraud probes, and now this...all announced in just the past 48 hours. The hits just keep on coming.
Let me count the ways...