NEW YORK (Reuters) - Bank of America Corp CEO Kenneth Lewis testified under oath that Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson pressured him to keep quiet about losses at Merrill Lynch & Co, which the bank was buying, the Wall Street Journal reported.
Testifying before New York Attorney General Andrew Cuomo in February, Lewis said “it wasn’t up to me” to reveal Merrill’s fourth-quarter losses as they were becoming apparent in December, the newspaper said, citing a deposition transcript.
Shareholders of Merrill and Bank of America voted to approve the merger on December 5, and the transaction closed on January 1. Bank of America subsequently reported that Merrill lost $15.84 billion in the fourth quarter.
At Bank of America’s April 29 annual meeting, shareholders will vote on whether to force Lewis to step down as chairman of the largest U.S. bank or leave its board, because of Merrill and a falling share price.
Many critics also want Lewis to give up the chief executive job, which he has held since 2001.
The Journal said Lewis testified that Bernanke and Paulson told him the merger needed to go through and that any failure would “impose a big risk to the financial system” of the United States.
Cuomo’s office is expected to release the deposition transcript to federal regulators and overseers of bank bailout money today, the newspaper said.
Bank of America shares have lost three-fourths of their value since the Merrill purchase was announced September 15.
Merrill’s losses triggered a federal bailout of Bank of America, including $20 billion of new capital, in January.
According to the Journal, a person in government familiar with Bernanke’s talks with Lewis said the Fed chairman did not offer advice on disclosure, suggesting instead that Lewis consult his own counsel.
The newspaper quoted Paulson’s spokeswoman as saying Paulson repeatedly told Lewis that “the U.S. government was committed to ensuring that no systemically important financial institution would fail.”
Bank of America did not immediately respond to a request for comment. A spokesman told the newspaper that the bank “had no legal obligation” to disclose its talks with the government, and that disclosure “likely would have severely disrupted the global financial markets and damaged the bank.”
Reporting by Ajay Kamalakaran in Bangalore and Jonathan Stempel in New York; Editing by Muralikumar Anantharaman and John Wallace