UPDATE 3-BofA ex-counsel says 'stunned' by firing

By Kim Dixon and Rachelle Younglai WASHINGTON, Nov 16 (Reuters) - Former Bank of America Corp general counsel Timothy Mayopoulos was "stunned" to be fired as the bank was trying to wrap up its purchase of Merrill Lynch & Co, after being promised the same job at the combined company. According to congressional testimony obtained by Reuters on Monday, Mayopoulos' firing on Dec. 10, 2008 came just nine days after he told Bank of America executives that Merrill's expected losses at the time provided no basis to invoke a contractual provision to abandon the takeover. "I had never been fired from any job and I had never heard of the general counsel of a major company being summarily dismissed for no apparent reason and with no explanation," he said in testimony. Now general counsel of mortgage financier Fannie Mae Mayopoulos said he also told a Bank of America executive that Merrill should have had responsibility to set year-end bonuses for its own workers. That contrasts with allegations by regulators and politicians that Bank of America had not properly disclosed having authorized Merrill to pay some $3.6 billion of bonuses. Mayopoulos said he advised the bank to make clear to Merrill's compensation committee that, had Bank of America posted results as poor as Merrill's, the bank would not have paid bonuses to its own employees. The U.S. House of Representatives Oversight and Government Reform Committee is holding a hearing on Tuesday to examine the government's role in the merger, as well as whether Bank of America misled investors, among other things. Others scheduled to testify are Brian Moynihan, who succeeded Mayopoulos as general counsel and is now Bank of America's retail banking chief, as well as two of the bank's directors, Charles "Chad" Gifford and Thomas May. Moynihan has been considered a leading candidate to replace retiring Bank of America Chief Executive Kenneth Lewis. He is a former executive at FleetBoston Financial Corp, which was led by Gifford until it was bought by Bank of America in 2004. SHOCK FIRING Mayopoulos said Lewis told him prior to being fired that he would be general counsel of the combined company. He also said that Moynihan, who was then running the bank's corporate and investment banking unit, at the time had "no interest" in becoming the general counsel. The oversight committee has been probing events leading to the close of the merger on Jan. 1 and whether Bank of America failed also to adequately disclose Merrill's fourth-quarter losses, which totaled $15.8 billion. Mayopoulos said that, in mid-November, he had conversations with the bank's outside counsel from law firm Wachtell Lipton Rosen & Katz and determined that disclosing Merrill's $5 billion of projected losses was not warranted. This is the congressional panel's fourth hearing probing the merger. It has already grilled Lewis, as well as Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Hank Paulson, who were instrumental in brokering the merger. Moynihan's candidacy to replace Lewis could be at stake depending on how he performs at the hearing. "It will make or break his candidacy to become the next CEO," said one Washington-based financial services executive. "It's in the board's interest to wait for Moynihan's appearance before they make a decision." The short list includes Moynihan and other Bank of America senior executives. The bank has said it could name Lewis' replacement by the U.S.

Thanksgiving holiday, which falls on Nov. 26. Gifford and May are on the bank's CEO search committee. Bank of America shares fell 11 cents to $15.87 on the New York Stock Exchange. (Additional reporting by Jonathan Stempel and Joe Rauch; editing by Steve Orlofsky, Phil Berlowitz and Andre Grenon) Keywords: BANKOFAMERICA/CONGRESS ([e-mail]; [phone]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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