Here’s a delicious story that hit the news feeds today. It’s a letter (link below) from Andrew Cuomo that details the pressure that the government applied to Bank of America as it sought to extricate itself from its acquisition of Merrill Lynch.
In short, both Henry Paulson and Ben Bernanke leaned heavily on B of A to continue with its Merrill Lynch acquisition in spite of significant deterioration in that company’s finances. Ken Lewis said that the remedies including the potential removal of himself and the entire board should the deal be rescinded, as it could under a Material Adverse Event clause in the merger agreement.
Naturally, the Board and Lewis’s decision to proceed with the merger had nothing to do with the threat. It’s a quick read, but you’ll be troubled for much longer than it takes to read.
Click here for a link to the Wall Street Journal story. It may require a paid subscription, however. Here’s a transcript excerpt from that story.
Q: Were you instructed not to tell your shareholders what the transaction was going to be?
A: I was instructed that ‘We do not want a public disclosure.’
Q: Who said that to you?
Q: Had it been up to you would you [have] made the disclosure?
A: It wasn’t up to me.
Q: Had it been up to you.
A: It wasn’t.
And here is a link to story on the occasionally coarse Dealbreaker blog.
And here is the letter: Andrew Cuomo BAC letter