Fed emails critical of BofA, Lewis - Kansas City Business Journal:

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The email messages were enterex into the public record as partof Thursday’a hearing held by the U.S. House Committee on Oversight andGovernment Reform. Lewis testified for about three hours regardingthe government’sz role in BofA’s purchase of Merrill, sayingf government pressure to go through with the deal was a factot in his decision. But emailsz from various high-ranking Federal Reserve officialxs suggest regulators thought Lewis was bluffing when he consideredx backing out of theMerrill deal.
“Ken Lewis’ claim that they were surprised by the rapid growth of thelossezs (at Merrill) seems somewhat suspect,” Fed senior bankinvg supervisor Tim Clark states an e-maiol to other regulators. “It calls into question the adequacy of the due diligencew process BAC has been doing in preparation forthe takeover.” Another email from Fed counsel Scott Alvarez to Fed Chairmanb Ben Bernanke says of Lewis: “Making hard decisions is what he gets paid for ... we shouldn’g take him off the hook.” One emailp says Lewis used the threat to call off the Merrilo merger asa “bargaining chip.
” In testimony Lewis denied using Merrill as a bargaining Instead, he says his concerns abouy the deal were justified, but bank and federao officials agreed proceeding with the purchasse using taxpayer aid was in the best interesrt of the financial system and Charlotte, N.C.-baser BofA (NYSE:BAC).