Thursday April 23, 02:13 PM
Exec says US sought silence on Merrill woes
WASHINGTON (AFP) - US officials pressed for silence on Bank of America (NYSE: IKJ - news) 's plan to buy troubled investment bank Merrill Lynch (NYSE: MER - news) last year for fear of a collapse of the financial system, the Wall Street Journal reported Thursday.
The newspaper reported that Bank of America's chief executive, Kenneth Lewis, testified before the New York state attorney general that former Treasury secretary Henry Paulson and Federal Reserve chairman Ben Bernanke did not want Merrill's troubles revealed before the deal went through.
Announcing Merrill's staggering 15.84 billion dollars in losses in the fourth quarter of 2008 could have led shareholders to block the takeover and left Merrill to collapse, officials feared.
Paulson and Bernanke felt stopping the deal would "impose a big risk to the financial system," according to Lewis' testimony reported by the daily.
"Isn't that something that any shareholder at Bank of America ... would want to know?" state Attorney General Andrew Cuomo asked, according to a transcript obtained by the Journal.
"It wasn't up to me," Lewis said.
After the deal was done, Bank of America got a 20-billion-dollar government bailout in January to help it absorb Merrill. Earlier it had received 25 billion dollars in government capital to help it weather the global financial crisis.
Lewis did not, however, say that he was explicitly told to keep quiet by US officials.
The daily reported a source close to the deal said Lewis may have misinterpreted Treasury comments.
The New York attorney general has been investigating Bank of America and Merrill Lynch since January for not having divulged the troubled takeover deal to stockholders.
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