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Bank of America

An offer he can't refuse

2009
Washington D.C., U.S.

Bank of America CEO Kenneth Lewis testified before Congress that he had some misgivings about the acquisition of Merrill Lynch and that federal officials pressured him to proceed with the deal or face losing his job and endangering the bank's relationship with federal regulators. Lewis' statement is backed up by internal emails subpoenaed by Republican lawmakers on the House Oversight Committee. In one of the emails, Richmond Federal Reserve President Jeffrey Lacker threatened that if the acquisition did not go through, and later Bank of America were forced to request federal assistance, the management of Bank of America would be "gone". Other emails, read by Congressman Dennis Kucinich during the course of Lewis' testimony, state that Mr. Lewis had foreseen the outrage from his shareholders that the purchase of Merrill would cause, and asked government regulators to issue a letter stating that the government had ordered him to complete the deal to acquire Merrill. Lewis, for his part, states he didn't recall requesting such a letter. The acquisition made Bank of America the number one underwriter of global high-yield debt, the third-largest underwriter of global equity, and the ninth largest adviser on global mergers and acquisitions. As the credit crisis eased, losses at Merrill Lynch subsided, and the subsidiary generated $3.7 billion of Bank of America's $4.2 billion in profit by the end of quarter one in 2009, and over 25% in quarter 3 2009.


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