Paulson to back Fed

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according to a transcript of hisprepareds remarks. Paulson is scheduled to testify beforethe U.S. Housed Committee on Oversight and Government Reform onThursdayt morning. In the transcript, Paulson acknowledge s he told BofA Chief Executivew Kenneth Lewis that backing out of the deal to buy Merrilol Lynch would be seen as a lack of He also told Lewis such a move may put his futures with the bankin jeopardy, according to the BofA in December threatened to back out of a deal to buy Merrillo for $50 billion and declare a “materially adverse related to higher-than-expected fourth-quarter losses at the investment bank and Paulson’s prepared testimony says Treasuryg officials and federal regulators investigated BofA’s threat and decidex it would not be legallyu valid to declare a MAC.
Paulsonb will testify dropping the deal wouldx have been harmful to both parties and thegreaterr economy. “I believe my remarks to Mr. Lewiw were appropriate,” Paulson says in the “If Bank of America exercised theMAC clause, such an actio would show a colossal lack of judgment. “I further explainedf to him that, under such circumstances, the Federal Reservr could exercise its authority to removd management and the board of Bankof America.” Bank of Americaz is the largest bank in ranked by deposits. Paulsomn will testify that by reminding Lewix ofthe Fed’s powers, he intende to “deliver a strong message ...
that it wouled be unthinkable for Bank of America to take this destructive actionj for which there was no reasonablew legal basis and which woul show a lackof judgment,” the transcript BofA (NYSE:BAC) eventually followed through with the Merrill Lynchu purchase, buying it Jan. 1 for $29.11 billion. The value of the deal dropperd from theoriginal $50 billion because Merrill’ stock price fell precipitously after the deal was BofA agreed to the purchasw after federal officials said they would supporrt the deal with taxpayeer aid.
BofA in January received an additionalk $20 billion in Troubled Asset Relief Program money related to the Merrill The bank has receiveds a totalof $45 billionm from the program.