Lawmakers Order Fed to Relinquish Merrill Documents
By Amit R. Paley
Washington Post Staff Writer
Wednesday, June 10, 2009
A congressional oversight committee issued a subpoena yesterday to force the Federal Reserve to turn over internal documents related to Bank of America’s acquisition of Merrill Lynch, part of a growing investigation into whether government officials pressured the bank to withhold details about the deal from investors.
The subpoena, which was issued by the House Oversight and Government Reform Committee, is highly unusual and the first issued by the panel this year. It comes after the Fed refused to send the committee internal e-mails and notes related to its role in the purchase.
A Fed spokesman said the central bank was already complying with the subpoena. The agency had previously allowed congressional investigators to review 6,000 pages of documents but would not give them copies because the documents were of "a confidential and supervisory nature," the spokesman said.
In written testimony prepared for a committee hearing tomorrow, Bank of America chief executive Kenneth Lewis says he informed Treasury and Fed officials that he "had concerns about closing the transaction" in mid-December after he "became aware of significant, accelerating losses at Merrill Lynch."
"At that time, we considered declaring a ‘material adverse change,’ which as a matter of contract law can, if upheld, allow an acquirer to avoid consummating a deal," Lewis said in the testimony, which was obtained by The Washington Post. "Treasury and Federal Reserve representatives asked us to delay any such action, and expressed significant concerns about the systemic consequences and risk to Bank of America of pursuing such a course."
