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Former U.S. Treasury Secretary Henry Paulson said that he acted appropriately in warning Bank of AmericaChief Executive Kenneth Lewis that top executives could be ousted if they walked away from a merger with Merrill Lynch.
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AP Henry M. Paulson, US Treasury Secretary |
While Paulson acknowledged in testimony prepared for delivery to a congressional panel on Thursday that he told Lewis the Federal Reserve could oust the bank's management and board if it walked away from the deal, he said Fed Chairman Ben Bernanke never instructed him to indicate to Lewis any actions the Fed might take.
"It would be unthinkable for Bank of America to take this destructive action for which there was no reasonable legal basis and which would show a lack of judgment," Paulson said.
A copy of the testimony was made available on Tuesday. The former Treasury chief said he told Lewis on Dec. 21, 2008, that the government felt "very strongly" that if Bank of America sought to back out of the deal, it would show a "colossal lack of judgment." "Under such circumstances, the Federal Reserve could exercise its authority to remove management and the board of Bank of America," he said.
Lawmakers have focused on government actions surrounding the Bank of America's [BAC
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] merger with Merrill to vent frustration at authorities' handling of the financial crisis. Paulson's appearance follows testimony by Lewis and Bernanke before the panel.
Some lawmakers have slammed what they say was government heavy-handedness in pressuring Bank of America to go through with the deal after escalating losses at Merrill came to light.
Others are unhappy over what they believe was government pressure on Bank of America to withhold information from shareholders about Merrill's losses.
Data is a real-time snapshot *Data is delayed at least 15 minutes