Published: Wednesday, 14 Oct 2009 | 11:26 AM ET

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It was Jan. 15, and the government was about to hand Bank of America its second taxpayer lifeline as the bank was drowning in losses from its recent marriage to Merrill Lynch.

Kenneth D. Lewis, the chairman of Bank of America

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[BAC  Loading...      ()   ], and other top executives convened a late-afternoon conference call to explain the bank’s latest problems to the board: Not only was the government making the new multibillion-dollar bailout on punishing financial terms, but Merrill’s losses — already thought to be steep — were also far worse than the bleak estimates tallied just weeks earlier.

As Mr. Lewis and the other executives continued their briefing, one board member minced no words in his assessment of the situation.

“Unfortunately it’s screw the shareholders!!” Charles K. Gifford wrote to a fellow director in an e-mail exchange that took place during the call.

“No trail,” Thomas May, that director, reminded him, an apparent reference to the inadvisability of leaving an e-mail thread of their conversation.

The e-mail messages, reviewed by The New York Times, were handed over to the House Committee on Oversight and Government Reform this week as Bank of America opened a collection of documents that it has kept secret about the ill-fated merger. While the e-mail does not show that the bank deliberately kept vital information on the deal from shareholders, it opens a window onto the concerns harbored by several board members over the Merrill deal.

Shortly after Mr. May’s remark about an e-mail trail, Mr. Gifford said his comments were made in “the context of a horrible economy!!! Will effect everyone.”

“Good comeback,” Mr. May replied.

A bank spokesman, Lawrence Di Rita, declined to comment on the e-mail. But he said “we believe the full record in context demonstrates that we acted in good faith and with appropriate disclosure in the Merrill Lynch acquisition.”

The bank, which resisted investigators’ efforts to identify the executives who failed to disclose Merrill’s losses to shareholders, is now planning to send more documents in the next week to Congress, as well as to the attorney general of New York and the Securities and Exchange Commission, which are all investigating the Merrill merger. The documents could also provide fodder for shareholder lawsuits.

“E-mails are often the best trails to what a person is really thinking,” said Mark C. Zauderer, a corporate litigator in New York. “That kind of spur-of-the-moment reaction provides grist for the mill of plaintiffs’ lawyers where issues of honesty and integrity are at issue.”

The deal, forged in the throes of the financial crisis last September, has come under political and regulatory scrutiny, and has prompted an uproar from shareholders who say they might never have approved it had executives disclosed the true extent of Merrill’s ill health, or revealed the hefty bonuses Merrill paid its traders and bankers right before the deal closed.

Many are also angry that Mr. Lewis did not reveal how deeply his own concerns about the deal ran: several weeks after shareholders approved the merger, new assessments of Merrill’s losses so startled Mr. Lewis that he told the government he was thinking of backing out. The government, wanting to avoid a fresh panic in financial markets, urged him to stick with it. And he kept those negotiations a secret.

The bank’s board, however, was kept apprised of many developments in the merger, and the House oversight panel investigating the matter plans to question several of them, said Edolphus Towns, Democrat of New York and chairman of the committee. The documents his committee has seen include e-mail messages between bank directors regretting the deal within days of its announcement, according to a person familiar with the committee’s documents. Also, some directors have already received subpoenas from the New York attorney general, Andrew M. Cuomo.

The January dialogue between Mr. Gifford and Mr. May capped months of conflict that simmered between some board members and the bank’s management since the weekend of Sept. 13, when Mr. Lewis agreed to the deal. Mr. Gifford, who ran FleetBoston Financial before Mr. Lewis bought it in 2004 to enlarge Bank of America’s reach, was the lone board member to argue against the merger, said a person who attended the bank’s board meetings but was not authorized to discuss them.

On that frenzied weekend, as Lehman Brothers came crashing to the ground, Mr. Gifford urged Mr. Lewis to wait a day or two to see if he could pick up Merrill for a lower price to obtain better value for Bank of America shareholders, this person said. Mr. Lewis argued that he could lose a golden opportunity to make the investment bank the crown jewel of his empire if he held off, and he agreed to pay about $50 billion in stock for Merrill.

Merrill’s hefty price tag quickly became sore point for shareholders. When Mr. Lewis and other executives considered backing out of the deal, they turned to federal regulators about a second bailout for the merged company.

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Mr. Gifford and Mr. May both live in the Boston area, and have been close for a long time. They were part of the handful of Boston-based directors that clashed with Mr. Lewis in early December over a star executive whom they backed. After learning that Mr. Lewis planned to fire the executive, Brian Moynihan, these directors pressured Mr. Lewis to find him a new job. Mr. Moynihan is now a leading internal candidate to succeed Mr. Lewis, who announced early retirement this month. Mr. Gifford and Mr. May are on the selection committee.

In the January board call that prompted the Boston directors’ e-mail messages, directors learned that the government was charging the bank a lot more for the second bailout than the directors expected. The directors also learned they would have to cut the bank’s common stock dividend to a penny, from 32 cents — something that particularly upset Mr. Gifford because he held half of his own financial assets in company stock and, with other shareholders, had watched the value of that investment decline.

Michael Useem, a corporate governance professor at the Wharton School at the University of Pennsylvania, said the e-mail messages raised as many questions as answers.

Without a transcript of the call, he said, it is difficult to determine if Mr. Gifford’s remarks reference the actions of Mr. Lewis, the government, or other parties.

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