Congress calls on BofA directors to testify: source

WASHINGTON/CHARLOTTE, N.C (Reuters) - Two Bank of America directors have been asked to testify before Congress on the bank's acquisition of Merrill Lynch and ensuing fallout, a source familiar with the matter said on Friday.

The House Oversight and Government Reform Committee has asked Charles Gifford and Thomas May to appear on Thursday, October 22, the source said.

The request comes just days after the bank decided to waive its legal privileges protecting names of those who made decisions on the Merrill merger.

CNBC television reported that on Thursday, Bank of America briefed the New York Attorney General's office and the Securities and Exchange Commission and the House committee on e-mail correspondence with Watchell, Lipton, Rosen & Katz, the bank's outside counsel for the Merrill Lynch deal.

The bank contends it relied on outside counsel in its disclosure process leading up to the Merrill Lynch purchase in early 2009, according to CNBC.

A Bank of America spokesman was not immediately available for comment.

The news also comes as the bank reported worse-than-expected third quarter earnings.

CEO Ken Lewis' impending departure -- he is planning to retire at year's end and a successor has not been named -- has fueled some speculation the bank is eager to move beyond its current legal woes.

Both May and Gifford are former FleetBoston Financial directors who joined Bank of America when the Northeastern U.S. bank was purchased by the Charlotte, North Carolina-based lender in 2004 for roughly $43 billion.

In 2008, May chaired the bank's audit committee, while Gifford served on the executive committee.

Both remain on the board, and are members of the special, six-member committee responsible for finding CEO Ken Lewis' successor.

The House committee also has asked Securities and Exchange Commission Chairman Mary Schapiro, Federal Deposit Insurance Corp Chairman Sheila Bair and former SEC head Christopher Cox to testify.

Neil Barofsky, the watchdog for the Troubled Asset Relief Program, also has been called on to testify, as has Timothy Mayopoulos, Bank of America's former general counsel, the source said.

The panel, led by U.S. Rep. Edolphus Towns (D-NY) is embroiled in an on-going dispute with Bank of America over the House committee's investigation into the Merrill Lynch & Co purchase.

Key issues include whether the bank failed to adequately disclose to shareholders the investment bank's fourth quarter losses, topping $15 billion, and roughly $3 billion in bonus payments to Merrill employees before the deal was completed.

At times this summer, Towns has said he believes the bank was impeding the investigation by failing to cooperate fully.

In August, Towns sent a letter to the bank, alleging the bank had produced records unrelated to the investigation as part of a document request, flooding the committee with tangential and unrelated correspondence.

The bank has consistently denied those allegations.

(Reporting by Rachelle Younglai and Joe Rauch; editing by Carol Bishopric)