Bank of America chief executive Kenneth Lewis told the New York attorney general he believed former US treasury secretary Henry Paulson and Fed Chairman Ben Bernanke wanted him to keep quiet about the worsening terms of the bank’s acquisition of Merrill Lynch, according to testimony reviewed by the Wall Street Journal.
The New York attorney general’s office planned to release the testimony yesterday to federal regulators and overseers of bailout funds and banks, the newspaper reported after reviewing a transcript.
Lewis testified in February to New York Attorney General Andrew Cuomo’s office, which has been trying to determine whether Merrill Lynch and Charlotte, North Carolina-based Bank of America failed to provide adequate disclosures to shareholders about the more than US$15 billion in losses that Merrill incurred in the fourth quarter and hefty bonus payments.
Had they had that information, Bank of America shareholders might have voted down the deal.
The Journal said in yesterday’s edition that Lewis did not say in the transcript that he was told specifically to remain silent about Merrill’s burgeoning losses.
But the paper quotes Lewis as testifying that disclosing that information “wasn’t up to me,” and that he was warned by Paulson and Bernanke that failing to complete Merrill’s takeover would “impose a big risk to the financial system.”
Citing a person familiar with the matter, the newspaper said Paulson told the New York attorney general’s office last month that Lewis may have misread some remarks about the Treasury’s disclosure requirements as instead pertaining to his bank’s obligations.
The US government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under and insurer AIG received its initial government support. Both the government and Wall Street were under substantial pressure to contain the financial meltdown.
Bank of America had received US$25 billion in federal bailout funds, but was later given an additional US$20 billion as Lewis showed trepidation about completing Merrill’s purchase and said the bank needed help offsetting the losses it was absorbing from the troubled brokerage.
Just a few weeks after the deal was completed, Bank of America’s earnings report showed the major hit its balance sheet would take on the Merrill transaction, quickly making Lewis the target of much shareholder fury.
Two of the nation’s largest state pension funds are seeking to lead a class action lawsuit against Bank of America, alleging the bank’s management “misstated or omitted” important information about Merrill’s financial health before the deal was completed.
And Finger Interests Number One Ltd, which owns about one-fifth of one percent of Bank of America stock, is asking shareholders to vote against re-electing Lewis as well as lead director O Temple Sloan and Jackie Ward during the bank’s annual meeting on Wednesday.
A Ministry of Foreign Affairs official yesterday said that a delegation that visited China for an APEC meeting did not receive any kind of treatment that downgraded Taiwan’s sovereignty. Department of International Organizations Director-General Jonathan Sun (孫儉元) said that he and a group of ministry officials visited Shenzhen, China, to attend the APEC Informal Senior Officials’ Meeting last month. The trip went “smoothly and safely” for all Taiwanese delegates, as the Chinese side arranged the trip in accordance with long-standing practices, Sun said at the ministry’s weekly briefing. The Taiwanese group did not encounter any political suppression, he said. Sun made the remarks when
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BROAD AGREEMENT: The two are nearing a trade deal to reduce Taiwan’s tariff to 15% and a commitment for TSMC to build five more fabs, a ‘New York Times’ report said Taiwan and the US have reached a broad consensus on a trade deal, the Executive Yuan’s Office of Trade Negotiations said yesterday, after a report said that Washington is set to reduce Taiwan’s tariff rate to 15 percent. The New York Times on Monday reported that the two nations are nearing a trade deal to reduce Taiwan’s tariff rate to 15 percent and commit Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to building at least five more facilities in the US. “The agreement, which has been under negotiation for months, is being legally scrubbed and could be announced this month,” the paper said,
MIXED SOURCING: While Taiwan is expanding domestic production, it also sources munitions overseas, as some, like M855 rounds, are cheaper than locally made ones Taiwan and the US plan to jointly produce 155mm artillery shells, as the munition is in high demand due to the Ukraine-Russia war and should be useful in Taiwan’s self-defense, Armaments Bureau Director-General Lieutenant General Lin Wen-hsiang (林文祥) told lawmakers in Taipei yesterday. Lin was responding to questions about Taiwan’s partnership with allies in producing munitions at a meeting of the legislature’s Foreign Affairs and National Defense Committee. Given the intense demand for 155mm artillery shells in Ukraine’s defense against the Russian invasion, and in light of Taiwan’s own defensive needs, Taipei and Washington plan to jointly produce 155mm shells, said Lin,
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