- The Washington Times - Wednesday, November 18, 2009

A senior House Democrat denied that the government forced Bank of America to go through with a takeover of Merrill Lynch, despite past comments to the contrary from the bank’s former top executive.

House Oversight and Government Reform Committee Chairman Edolphus Towns, during a Tuesday hearing of his panel, said that evidence and testimony by Bank of America officials show that “nobody in the government did anything improper during this transaction.”

“If there are still people who want to say the government forced Bank of America to go through with this deal, they are turning a blind eye to the facts we have before us,” the New York Democrat said.

Mr. Towns said that rather it was the bank that forced the merger.

“It sure looks like it was Bank of America that was holding the shotgun at this wedding,” he said.

The hearing was part of an ongoing inquiry into accusations the bank improperly concealed billions of dollars in losses and billions in bonuses paid by Merrill Lynch before a shareholder vote on their proposed merger.

The panel also is looking into claims that Federal Reserve Chairman Ben S. Bernanke and then-Treasury Secretary Henry M. Paulson Jr. pressured former Bank of America Chief Executive Kenneth Lewis to keep quiet about Merrill Lynch’s financial problems.

Mr. Lewis told the committee in June that officials in the Bush administration and the Federal Reserve threatened to remove top executives of his bank unless the financial giant went ahead with the merger for the good of the foundering economy.

Mr. Lewis said the threat was not the deciding factor in the bank’s decision to buy Merrill Lynch, at the time the nation’s largest investment banking firm. But he added, “What gave me concern was that they would make that threat to a bank in good standing.”

But Brian Moynihan, Bank of America’s president of consumer and small-business banking who briefly served as the bank’s general counsel around the time of the merger, told the panel Tuesday that “I did not feel pressured at any point by the government.”

Last fall, Bank of America received $25 billion in federal bailout aid. After agreeing to proceed with the Merrill Lynch deal, the bank received an additional $20 billion in taxpayer funds in early 2009.

The committee’s top Republican, Rep. Darrell Issa of California, has accused the Towns-led inquiry of covering up the Obama administration’s actions in securing billions of dollars of taxpayer support for Bank of America in exchange for the bank’s promise not to demand a lower purchase price for Merrill Lynch.

The committee’s “time and resources have been redirected to pursue politically convenient scapegoats at Bank of America,” Mr. Issa said. “These [bailout] funds were a quid pro quo to entice Bank of America to go through with the merger.”

Mr. Lewis and Bank of America also have come under scrutiny from the committee - as well from the Securities and Exchange Commission - after it was revealed earlier this year the bank allowed Merrill Lynch to dole out $3.6 billion in executive bonuses just prior to the merger.

Timothy Mayopoulos, who was general counsel at the bank until December 2008, told the committee he played no role in deciding whether to disclose the bonuses to Bank of America shareholders.

“To my recollection, I had no role in this issue,” Mr. Mayopoulos told the hearing. “That was done by others.”

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