BofA skips Congress deadline, faces new SEC threat

By Rachelle Younglai and Joe Rauch

WASHINGTON/NEW YORK (Reuters) - Bank of America failed to meet a Monday deadline to hand lawmakers further details about its acquisition of Merrill Lynch and faces the possibility of new charges from U.S. securities regulators.

The standoff with the House oversight committee heightened the chances lawmakers may subpoena the bank and raised the stakes for a Tuesday meeting between a senior bank executive and the committee chairman.

Separately, the Securities and Exchange Commission said it could pursue additional charges against Bank of America after a federal judge last week rejected a $33-million settlement between the bank and the regulator.

An SEC statement made no mention of dropping the case that alleges Bank of America misled investors over bonuses paid to Merrill Lynch employees. "We believe that this disclosure failure violated the federal securities laws," the agency said.

Bank of America is defending itself on multiple fronts over the Merrill deal, including shareholder lawsuits and a threat by New York Attorney General Andrew Cuomo to file civil charges against top executives.

Despite its legal battles, Bank of America announced on Monday it would exit a $118-billion asset-guarantee program it entered with the U.S. government on the heels of its January 1 purchase of Merrill Lynch.

Charlotte, North Carolina-based Bank of America said it will pay a $425-million fee to exit the facility that was never formally signed but was laid out in a term sheet in January.

Shares of Bank of America, which had closed 2.2 percent lower to $17.25 in regular trading Monday, were 4 cents higher in after-hours trade following word of its exit from the government support program and the SEC statement.

SUBPOENA COULD BE ISSUED

An aide with the House oversight panel said its chairman was disappointed Bank of America missed the Monday noon deadline, especially after it submitted reams of unhelpful documents such as an announcement of an annual nut sale featuring "This Year's Crop of Mammoth Pecan Halves."

"The subpoena is the next logical step," said the aide, speaking on condition of anonymity.

Edolphus Towns' House Oversight and Government Reform is investigating details surrounding Bank of America's purchase of Merrill Lynch, including the disclosure of pre-merger losses at the investment bank, what funding commitments the U.S. government made prior to the deal and what legal basis the bank may have had for backing out of the transaction.

Some lawmakers believe Bank of America was forced by the U.S. Treasury and the Federal Reserve to go through with the Merrill deal as part of efforts to prop up the banking system during last year's financial crisis.

Others are critical of Bank of America for not giving more information to shareholders about Merrill's financial condition and for letting Merrill pay bonuses before the deal was completed on January 1.

"We are working with the committee on a plan to provide them with the information they need," Bank of America spokesman Scott Silvestri said in an emailed statement.