Which is Lewis’s greater duty? To his shareholders who certainly should have known the true condition of MER PRIOR to the acquisition, or to his country to prevent “systemic meltdown?”
Here’s CNBC’s great “in depth” analysis:
They have one thing right, Paulson won’t be admitting to anything anytime soon. According to the WSJ, Lewis is claiming that Paulson pressured or “threatened” Lewis. I’m now hearing that Cuomo is investigating this issue and that there may be a memo threatening to remove Lewis if he didn’t go along with Bernanke’s and Paulson’s plan. Here’s an outline of what is being reported this morning:
Lewis Says Pressured To Keep Mum On Merrill Deal: WSJ
Thu. April 23, 2009; Posted: 09:23 AM
(RTTNews) - Markets are abuzz Thursday morning following a report that Bank of America Corp. CEO Ken Lewis testified that he was asked by government officials not to discuss the plan to buy embattled Merrill Lynch & Co. The report noted that Lewis believed former Treasury Secretary Henry Paulson and Federal Reserve Chairman Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, which Bank of America acquired in January.
The Wall Street Journal's report alleges that in testimony given in February Lewis told New York Attorney General Andrew Cuomo that he was under the impression that the officials wanted him to remain quiet. Paulson and Bernanke were allegedly concerned about the potentially devastating fallout if Merrill was not acquired by Bank of America.
Specifically, Cuomo's team questioned Lewis about keeping Merrill's $15.84 billion fourth-quarter loss under wraps, violating state law. Lewis cited Paulson and Bernanke's concerns that the failure to complete the deal would "impose a big risk to the financial system."
In addition, Paulson's spokeswoman was cited by the WSJ as assuring Lewis that "the U.S. government was committed to ensuring that no systemically important financial institution would fail."
"Everybody -- Lewis, Paulson, Bernanke -- eventually agreed that any public discussion of the situation at Merrill would have adverse consequences for the system," the WSJ wrote, citing a source close to Bank of America.
In February, Lewis was issued a subpoena by Cuomo as part of an investigation into whether the bank withheld information from investors in violation of state law.
The office of the Attorney General is exploring whether investors were misled about the depth of Merrill's losses in late 2008.
In addition, the investigation is also trying to determine whether details of the bonuses to Merrill employees, contained in a nonpublic document, should have been disclosed to investors.
In February, Cuomo authored a letter to Chairman of the House Financial Services Committee, Barney Frank D-Mass., questioning the decisions made by Merrill Lynch with regard to distribution of bonuses despite a large quarterly loss.
"Merrill Lynch's decision to secretly and prematurely award approximately $3.6 billion in bonuses, and Bank of America's apparent complicity in it, raise serious and disturbing questions," Cuomo wrote.
The bonuses were reported at minimum of $1 million each to 696 employees, for a total of $3.6 billion. The top four employees reportedly received a combined $121 million between them, with the next four splitting $62 million, and the next six received $66 million, he said, calling it a "surprising fit of corporate irresponsibility."
"By December 8, 2008, Merrill and presumably Bank of America must have been aware that the fourth quarter and yearly earnings results were disastrous," said Cuomo.
On January 16, the companies announced that in the fourth quarter alone Merrill Lynch lost $15.31 billion and more than $27 billion for the year.
Bank of America later announced that the federal government would invest $20 billion in the deal and provide $188 billion in protection against further losses primarily from the Merrill Lynch portfolio.
Cuomo said that he plans to question executive about whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the TARP funding given to Bank of America.
"Merrill Lynch had never before awarded bonuses at such an early date and this timetable allowed Merrill to dole out huge bonuses ahead of their awful fourth quarter earnings announcement and before the planned takeover of Merrill by Bank of America."
Let me boil this entire argument down for you. BAC is one of the Primary Dealers granted member status by the “FED.” Here is a list of the current Primary Dealers:
BNP Paribas Securities Corp.
Bank of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Deutsche Bank Securities Inc.
Dresdner Kleinwort Securities LLC.
Goldman, Sachs & Co.
Greenwich Capital Markets Inc.
HSBC Securities (USA) Inc.
J. P. Morgan Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
UBS Securities LLC.
These Primary Dealers are the only banks allowed to trade directly with the 12 regional “Federal” Reserve Banks. Many of the Primary Dealer corporate officers hold positions within the regional Reserve Banks/Fed. For example, JPM CEO Jamie Dimon holds a board position with the New York Fed. And of course MANY former Goldman Sachs officials, like Hank Paulson, hold or have held many positions within the Treasury. This is the “club.” They all work together, but they DO NOT WORK FOR NOR DO THEY REPRESENT THE PEOPLE despite what they might tell you.
THEY ARE ONE IN THE SAME. They can blame each other all they want, but that is a distraction. The truth is that they are all IN COLLUSION to rob the American taxpayers and they do not give two cents worth of damn about shareholders.
We will not have TRANSPARENCY until the people take back the central banking function and put all these SOB’s back in their place. Corporations, and especially banks are not supposed to own or run our country. Hank Paulson is a traitor to his country and belongs in prison (or worse).
Our wonderful media is going to frame the issue and box it in… no doubt attorneys will get in there too. You will likely not hear about what I consider to be THE REAL ISSUE which is the collusion and the skirting of the rule of law and WHY that is allowed to happen. I say corporations and state must be separate and that the central banking function must be returned to the people who rightly own it.
The Animals - We Gotta Get Out Of This Place (1965):