Bank of America chief executive officer Ken Lewis said Thursday his bank went through with the Merrill Lynch acquisition late last year after the government committed to taking on some of the risk of the merger.
In mid-December after the company’s shareholder vote to acquire the investment bank, Lewis said he became aware of “significant accelerating losses at Merrill Lynch, and we contacted officials at the Treasury and Federal Reserve to inform them that we had concerns about closing the transaction,” according to prepared statements ahead of a hearing today before a congressional panel which convened to discuss about the acquisition.
B of A considered invoking a “material adverse change” clause in a contract that if upheld would allow Bank of America to avoid consummating the deal.
“Treasury and the Federal Reserve representatives asked us to delay any such action, and expressed significant concerns about the systemic consequences and risk to Bank of America of pursuing such a course,” Lewis wrote.
“For its part, Bank of America concluded that there were serious risks to declaring a material adverse change, and that proceeding with the transaction, with governmental support, was the better course,” he said.
“This course made sense for Bank of America and its shareholders, and made sense for the stability of the markets,” he said. “We viewed those two interests as consistent.”