Saturday, June 20, 2009

House panel subpoenas Fed over BofA/Merrill merger

House panel subpoenas Fed over BofA/Merrill merger
NEW YORK (Reuters) - A congressional committee said on Friday it has served the Federal Reserve with a second subpoena for documents related to Bank of America Corp's purchase of Merrill Lynch & Co.
The demand from the U.S. House Oversight and Government Reform Committee was announced six days before Fed Chairman Ben Bernanke is scheduled to testify about the central's bank's role in the weeks surrounding the January 1 purchase.
Edolphus Towns, the New York Democrat who chairs the panel, is seeking documents that discuss "closed-door discussions" that took place between September and January among the Fed, the Treasury Department and Bank of America.
Federal Reserve spokeswoman Michelle Smith said the Fed had received the subpoena and would respond.
Lawmakers have accused Bernanke and former U.S. Treasury Secretary Henry Paulson of pressuring Charlotte, North Carolina-based Bank of America to complete the merger and not reveal Merrill's financial problems, so as to not destabilize the world's markets.
Kenneth Lewis, Bank of America's chief executive, told the committee at a June 11 hearing that the bank had in December considered backing out of the merger when it learned that Merrill's losses were much larger than it expected.
Merrill would lose $15.84 billion in the fourth quarter. Two weeks after the merger closed, Bank of America accepted $20 billion of federal bailout money, and has now taken $45 billion from the government's Troubled Asset Relief Program.
It was not among the 10 large U.S. banks that the government this week allowed to repay their taxpayer-funded infusions. Bank of America has said it hopes to begin repaying TARP this year. The bank is the nation's largest by assets.
Bank of America shares were up 33 cents at $13.23 in late afternoon trading on the New York Stock Exchange. They traded at $33.74 before the Merrill purchase was announced September 15.
(Reporting by Jonathan Stempel; Editing by Tim Dobbyn)

Source: Reuters

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