VOL. 124 | NO. 118 | Thursday, June 18, 2009
Bernanke Invited to Testify on BofA-Merrill Deal
IEVA M. AUGSTUMS | AP Business Writer
CHARLOTTE, N.C. (AP) - A congressional panel has invited Federal Reserve Chairman Ben Bernanke to testify on June 25 about allegations by Bank of America Corp. CEO Kenneth Lewis that government officials pressed him to buy Merrill Lynch & Co. after Lewis became aware of major losses at the investment bank.
In a letter sent Tuesday, the House Oversight and Government Reform Committee says it is seeking information about what role the Federal government played in the decision to provide the Charlotte-based bank with federal aid to buy Merrill Lynch.
Last week, Lewis testified before Congress defending his rationale in purchasing New York-based Merrill Lynch. Lewis also said publicly for the first time he was pressured into going through with the deal.
A spokesman for Bank of America on Wednesday declined to comment.
Investors have been upset in recent months over a tremendous drop in Bank of America's stock price, continuing losses and ongoing government investigations surrounding the company's acquisition of Merrill Lynch.
In April, shareholders stripped Lewis of his chairman's title, and the bank said it was looking for new directors. Walter E. Massey, president emeritus of Morehouse College in Atlanta, was elected by BofA's board to replace Lewis as chairman.
The bank has since seen four directors leave and has appointed four new ones.
BofA has received $45 billion in government funds since the start of the financial crisis last fall, a portion of which was provided to help the bank manage massive losses from its acquisition of Merrill Lynch.
Last month, the federal government told Bank of America that it should raise $33.9 billion in capital to boost its reserves in case the economy worsens further. As part of its stress tests of the 19 largest U.S. banks, the government said Bank of America needed the most additional cash.
So far, the bank has raised nearly $33 billion and said it expects to top the government's required amount.
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