Emails revealed by congressional investigators show that representatives from the Federal Reserve were hostile towards Bank of America in the midst of its buyout attempt of Merrill Lynch, according to the Wall Street Journal. Documents unearthed as part of a congressional investigation of the merger deal demonstrate that Fed Chairman Ben Bernanke and others were critical of BofA’s attempts to dislodge themselves from acquiring Merrill.
The emails and documents subpoenaed from the Fed show that the regulator pressured BofA CEO Kenneth Lewis as the executive expressed his reluctance to take on the debt of the ailing Merrill. One exchange showed Bernanke accusing Lewis of using the threat of pulling out from the deal as a “bargaining chip,” saying that BofA’s arguments for doing so were “not credible.”
Another correspondence showed that Federal Reserve Bank of Richmond President Jeffrey Lacker told employees that Bernanke “intends to make it even more clear” that in the event of a deal backout, “management [would be] gone” should the bank apply for bailout funds.
The congressional investigation is being led by the House Committee on Oversight and Government Reform and Representative Edolphus Towns (D-NY). Lewis is expected to appear today before the Committee to detail BofA’s acquisition of Merrill, which concluded on January 1.