Bank of America CEO Ken Lewis has been walking a fine line during his testimony before the House Government Reform and Oversight Committee.
The committee is investigating claims that the Fed and/or Treasury Department improperly pressured Bank of America to go through with its acquisition of Merrill Lynch despite the latter company’s worsening losses in the fall and winter of 2008.
Lewis has acknowledged that the Treasury department said they would fire both him and his board if they backed out of the deal, but Lewis refuses to characterize that as a “threat.”
Instead, he says that the seriousness of Treasury’s position convinced him that they must be right about the necessity of the deal.
Committee members of both party’s have ridiculed that characterization. The fiercest of those critics so far has been Rep. Elijah Cummings (D-Md.)
Rep. Jeff Flake (R-Ariz.) agreed with Cummings incredulity, but with a lighter touch:
Lewis hasn’t yet given way, but the strikingly bipartisan consensus of the hearing so far is that the Treasury and Fed overstepped their bounds.
Transcripts of both exchanges after the jump:
CUMMINGS vs. LEWIS:
CUMMINGS: One of the things you have tried to do today is to walk a very thing line. You just heard Republicans and Democrats, say to some degree that whatever was said to you about losing your job and the board being dismissed, basically what we’ve said is we don’t buy it.
But I’m here to tell you that no matter how great Bank of America is doing today, the end, the means does not justify the end. in other words, throughout these transactions we must have honesty, integrity and transparancy. period.
What I’m saying to you is, I know you’re trying to be nice, but here we have situation where apparently Mr. Paulson has told you, ‘do it,’ so like a nike commercial….and then you come in here trying to tell us, ‘Oh no, i was worried, the sky was falling. I was just so upset.’ And we don’t buy it! So I’m going to give you another chance. You didn’t feel threatened?
LEWIS: Well,
CUMMINGS: I mean, don’t get us to describe it. We want to know what you were feeling! ANd you know why we want to know? Because we want to straighten out this mess.
LEWIS: I’ve been pretty consistent, as you’ve just described it, as it happened–
CUMMINGS: Well maybe you need to be inconsistent and tell us how you felt!
LEWIS: ….It was a strong influence on my decision, but it wasn’t the only influence.
FLAKE vs. LEWIS:
FLAKE: I just want to share my colleague’s skepticism here about whether or not this was a threat. it just seems completely incredulous that this wouldn’t be considered a threat. if this wouldn’t be considered a threat, i’d just ask you, what would be considered a threat. kidnap the family dog? release your college GPA scores?
LEWIS: I’m just trying to describe the circumstances and not put one word to it myself.
FLAKE: It seems from this vantage point that there’s sort of a Stockholm Syndrome thing going here. You’re still regulated by these entities, and it seems that you’ve identified with your captors, or your regulators in some way here. But we’d like to have a candid answer here.
I don’t know if you can wiggle your pinky finger at us, or something, or give us some sign that no one else will see–the big grin, maybe that gives it away.