(Who do Larry Summers and Tim Geithner really work for? Pres. Obama, American Voters or Wall Street? The Young Turks)
(June 10, 2009: Inside Bank of America's Purchase of Merrill Lynch - Internal E-mails Raise Questions About Bernanke and Paulson Role in BofA-Merrill Deal (Bloomberg News)
Bank of America deal had White House support
Top economic advisers to President Obama signed off on a deal to protect Bank of America from losses incurred by its purchase of failed Wall Street firm Merrill Lynch a month before the new administration took office, according to Bank of America documents.
The documents, describing internal discussions at the bank in late 2008, assert that executives were told that incoming National Economic Council Director Lawrence H. Summers and incoming Treasury Secretary Timothy F. Geithner had endorsed the deal to provide new guarantees to Bank of America.
The acquisition has been a source of protracted debate since earlier this year, when questions arose about whether federal officials exerted an inappropriate amount of pressure on Bank of America to complete the deal. There's also been debate about whether the bank made appropriate disclosures to its shareholders about losses at Merrill Lynch, its negotiations with the government for additional support and compensation plans at Merrill Lynch.
These issues have been the subject of investigations by the House Oversight and Government Reform Committee, the Securities and Exchange Commission and New York's attorney general.
The documents, which were obtained by The Washington Post and are in the hands of committee investigators, are the clearest sign that top Obama officials agreed with the Bush administration and the Federal Reserve's approach.
Bank of America chief executive Kenneth D. Lewis told the company's board that Federal Reserve Chairman Ben Bernanke told him "that Geithner and, in addition, Larry Summers, were both on board with the transaction," according to Dec. 22 talking points prepared for a conference call.
A Dec. 29 e-mail from Joe Price, Bank of America's chief financial officer, to Lewis and others said he had talked to Federal Reserve Governor Kevin Warsh.
He indicated that "we had the strongest assurances" that Bernanke "will survive the administration change" and that then-Treasury secretary Henry M. Paulson Jr. and Geithner, his eventual replacement, "were all aware and in agreement with the representations made to Ken Lewis in the discussions."
Treasury spokesman Andrew Williams said: "After being named as Treasury secretary nominee, Geithner was recused from any issues involving individual banks, including Bank of America. It was perfectly natural and appropriate that the incoming Treasury secretary would be kept apprised of key developments but he was not making decisions for the Government."
White House spokesman Matthew A. Vogel said Monday that "Summers had occasional briefings by Federal Reserve officials during the transition but did not make, review or approve decisions regarding financial institutions during that time."
John Thain Pops Champagne at News of Ken Lewis’s Departure
Ken Lewis was too tuckered out and, frankly, has way too much paperwork to sort out before he can begin properly celebrating his retirement from Bank of America. But one person who didn't waste any time getting the party started was John Thain, the Merrill Lynch executive Lewis ousted soon after BofA took over the firm last year.
Sources told The Post that the former Merrill Lynch boss spent yesterday quietly celebrating the resignation of Bank of America CEO Ken Lewis and hopes Lewis' downfall might help Thain repair his damaged reputation on Wall Street.
By "quietly," we assume they're not referring to the actual noise level as strains of "I Will Survive" and "I'm Still Standing" could be heard reverberating down the corridors of the former New York Stock Exchange head's apartment building for hours after the news was announced.
Folks were cracking the bubbly inside Bank of America, too, it seems, as one "top BofA official" felt loose enough to disclose to the Post that Lewis was
"A combative mother****** with a chip on his shoulder [who] not only looked for a fight but also relished it."
Then again, it's entirely possible he meant that as a compliment.
FBI looking into BofA-Merrill deal
The FBI in Charlotte and the U.S. Justice Department are among the multitude of agencies investigating Bank of America Corp.'s acquisition of Merrill Lynch & Co., a knowledgeable source told the Observer Friday.
The criminal investigation has been under way for about six months, the source said. The probe means an additional layer of scrutiny for the Charlotte-based bank, which bought Merrill on Jan. 1.
Bank of America already faces investigations from the New York attorney general's office, the Securities and Exchange Commission and the N.C. attorney general's office. Those probes have largely focused on the payment of billions in Merrill bonuses before the deal closed and the lack of disclosure of Merrill's ballooning fourth-quarter losses.
The previously disclosed investigations of the bank have appeared to largely involve civil matters that could lead to financial or regulatory penalties against the bank, or fines against some of its leaders.
The FBI involvement opens the possibility of criminal charges, although the scope and possible outcome of the probe remain unclear.
FBI spokeswoman Amy Thoreson and Justice Department spokesman Ian McCaleb said they could neither confirm nor deny the existence of an investigation.
Bank of America spokesman Jim Mahoney declined to confirm whether the FBI or Justice Department were investigating the bank, but he said there are "various government agencies that are continuing to look at the issues associated with Merrill Lynch." He said the agencies extend beyond the SEC and the New York and N.C. attorneys general.
"We continue to believe that no action is imminent, nor that there is any basis for any action," Mahoney said of the investigations.
The bank has provided hundreds of thousands of documents and dozens of hours of executive time in response to the agencies' requests, he said.
In securities filings in February and August, Bank of America said it was cooperating with inquiries from "governmental authorities" in regard to the Merrill merger and bonuses paid to employees for 2008, but it didn't specify agencies other than the SEC.
In testimony to Congress this week, FBI director Robert Mueller said the agency has over 100 agents assigned to more than 580 open corporate fraud investigations. He did not disclose any of the companies. In March, he testified that the agency had more than 566 corporate fraud investigations, including "matters directly related to the current financial crisis."
Meanwhile, the office of N.C. Attorney General Roy Cooper has stepped up its civil investigation by hiring a Loyola University Chicago law professor to help review documents and possible legal claims, according to a contract obtained by the Observer under a public records request. Steven Ramirez, a former SEC enforcement attorney, can make up to $10,640 for work through March, according to the contract.
In February, Cooper's office requested information from Bank of America about Merrill bonuses and its receipt of extra government assistance to complete the Merrill deal. In addition to bonuses, the investigation is beginning to look at how losses were calculated at Merrill in late 2008, according to a person familiar with the investigation.
Earlier this week, U.S. District Judge Jed Rakoff rejected Bank of America's $33 million settlement with the Securities and Exchange Commission over allegations that the bank misled investors about bonuses paid to Merrill employees. Rakoff ordered both parties to prepare for a Feb. 1 trial, although it's unclear how the SEC will proceed.
The office of New York Attorney General Andrew Cuomo is also reportedly preparing to file civil charges against unspecified Bank of America executives in coming weeks. Cuomo's office also is expected to subpoena the Bank of America directors who served on the bank's board at the time of the acquisition, expanding the investigation beyond the bank's management.
View Larger Map
Sources: Washington Post, NY Times, NY Mag, Washington Independent, Bloomberg News, McClatchy Newspapers, Charlotte Observer, The Young Turks, Youtube, Google Maps
.jpg)
No comments:
Post a Comment