US pressured Bank of America to buy Merrill: probe
US officials pressured Bank of America to complete a takeover of troubled investment firm Merrill Lynch last year after the banking giant wanted to back out, documents from a probe showed on Thursday.business Updated: Apr 23, 2009 22:08 IST
US officials pressured Bank of America to complete a takeover of troubled investment firm Merrill Lynch last year after the banking giant wanted to back out, documents from a probe showed on Thursday.
The documents released by New York state Attorney General Andrew Cuomo indicated that the US Treasury and Federal Reserve threatened to push out management and board members if the takeover were not completed.
The documents also showed regulators cautioned Bank of America chief Kenneth Lewis not to disclose the extent of Merrill's losses because of fears of a "disaster in the financial markets."
According to the documents, which included testimony from Lewis, Bank of America wanted to walk away from the deal announced in September to take over Merrill, which had been on the brink of collapse at the same time as Lehman Brothers, the Wall Street rival that went bankrupt and triggered a financial panic.
The documents showed Lewis had wanted to stop the Merrill deal because of a "staggering amount of deterioration" in the Wall Street firm's financial condition that had not previously been disclosed.
The disclosures came in a letter from Cuomo to US lawmakers, the Securities and Exchange Commission and the oversight panel establish by Congress for the Troubled Asset Relief Program.