Lewis: Gov. did pressure us on Merrill

Silla Brush reported this morning that the Treasury threatened to replace the board of Bank of America if it backed out of it’s agreement to acquire Merrill Lynch.

In testimony just now to the House Government Reform and Oversight Committee, Ken Lewis, CEO of Bank of America, confirmed this:

LEWIS: It is true that we were true that we were told that…I can’t remember the exact words….but basically if we went through with calling the [material adverse change, to back out of the deal], the government could or would remove management or the board….

The threat was not what gave me concern, what gave me concern that they would make that threat to a bank in good standing. It showed the seriousness with which they thought that we should not call a M.A.C., and so as a result of that, that was a factor in our decisions.

But there were also other considerations. You weren’t considered you’d win the MAC.

We thought, given the fact that the government felt that strongly and the fact there was a risk that you would not win the mac, and then finally that you might end up not getting Merrill Lynch in any sense, even after paying the fines, that it was in our best interest, that is the bank of america shareholder’s best interest, to go through with the merger.

Lewis later added that the Fed’s pressure was “in good intention,” but so far the hearing does not appear to alleviate any of the doubts surrounding the deal.