Several e-mails and documents obtained by investigators from Bank of America Corp. (NYSE:BAC) Friday reveal another story concerning the deal between BofA and Merrill Lynch & Co.
As The Deal predicted, the documents (available on
Dealbook) did bring
more light to the role Brian Moynihan played in the Merrill deal. Moynihan, the head of consumer and small-business banking, is being considered a candidate for CEO of BofA along with Greg Curl, who was the key dealmaker behind the deal before he was promoted to chief risk officer.
The e-mails show Moynihan was involved in the discussions on whether to back out of the deal due to Merrill's rising losses. There were disagreements within the management team whether t to invoke a "material adverse change," or MAC, clause.
The documents also reveal that Hank Paulson did threaten to remove CEO Ken Lewis, management and the board if the deal didn't go through due to the risk BofA would create in the financial system. Furthermore, Lawrence Summers and Treasury Secretary Timothy Geithner said they would provide new guarantees to BofA, as T
he Washington Post reports.
According to a
Bloomberg story, BofA signed off on its government-assisted purchase of Merrill Lynch after U.S. regulators said the deal might boost the shares.
"The chairman of the Federal Reserve indicated it would be structured in a manner such that BAC stock should go up when announced," Chief Financial Officer Joe Price said in a Dec. 29 e-mail to executives of the Charlotte, North Carolina-based bank, including Chief Executive Officer Kenneth D. Lewis.That, however, wasn't how it played out. Both management and the board pretty much wound up being replaced anyway. Ironic, isn't it? What affect this would have on whether Moynihan takes the reins at BofA is another story.
- Maria Woehr
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