Bank of America riding up against Congressional deadline on Merrill deal
Bank of America Corp. was facing a deadline Monday to turn over additional information about its acquisition of Merrill Lynch, this time to a Congressional committee.
Bank of America Corp. was facing a deadline Monday to turn over additional information about its acquisition of Merrill Lynch, this time to a Congressional committee.
It was not immediately known if Bank of America complied with the 12:00 p.m. EDT deadline to provide details about when the bank was aware of mounting losses and bonus payments at Merrill, as well as when it struck a deal with the government to receive additional bailout money to help support the acquisition.
In a letter to the bank on Friday, Rep. Edolphus Towns, D-N.Y., said Bank of America failed to provide key information regarding its knowledge of growing problems at New York-based Merrill to shareholders. Towns, who is chairman of House Committee on Oversight and Government Reform, said in the letter sent Friday that Bank of America was hiding behind attorney-client privilege, which Congress can refuse to recognize during its investigations.
Bank of America spokesman Scott Silvestri said, “We are working with the committee on a plan to provide them with the information they need.”
Silvestri declined to comment on whether or not the bank turned over any documents on Monday, but said Anne Finucane, a member of Bank of America’s executive management team, will meet with Towns Tuesday to discuss the matter.
Charlotte, N.C.-based Bank of America has come under heavy scrutiny from state and federal regulators, and politicians, about its hastily arranged acquisition of investment bank Merrill Lynch & Co. last fall. Bank of America agreed to buy Merrill at the peak of the credit crisis last fall as another investment bank, Lehman Brothers, was collapsing.
Regulators have questioned whether Bank of America failed to properly disclose details about problems at Merrill leading up to the deal closing on Jan. 1.
New York Attorney General Andrew Cuomo has been investigating the acquisition for much of the year and is planning to file fraud charges against some of Bank of America’s top executives in the coming weeks. He also recently subpoenaed five board members of the bank.
The Securities and Exchange Commission last month reached a settlement with Bank of America over its failure to tell shareholders about the bonus payments, though the bank did not acknowledge any wrongdoing as part of the settlement. A judge, however, rejected the $33 million agreement last week in a scathing decision, saying the SEC did not thoroughly investigate the case. The federal judge sent the case to trial, which is scheduled to begin Feb. 1 in New York.
Losses at Merrill forced Bank of America to receive a second round of government bailout money in January after the deal was completed. Bank of America has been among the banks hardest hit by the economic downturn and, along with Citigroup Inc., one of the largest recipients of government aid.
Bank of America has received $45 billion from the government’s Troubled Asset Relief Program, including $20 billion to help absorb Merrill losses. The government also agreed in January to a loss-sharing deal to cover hundreds of billions of dollars in risky investments Bank of America was absorbing in the Merrill acquisition.
Shares of Bank of America fell 35 cents, or 2 percent to $17.28 in afternoon trading.
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