Ken Lewis, CEO of Bank of America, who is fighting numerous shareholder lawsuits and investigations, has allayed the criticism that he was forced by Ben Bernanke, Chairman of Fed Reserve and Henry Paulson, former Treasury Secretary, to consummate the $44 billion controversial takeover of Merrill Lynch, reported The Independent.
Initially, BofA was not in favour of the acquisition due to Merrill’s mounting losses, but ultimately gave green signal after getting guarantee it would get assistance from Fed Reserve. The acquisition of Merrill Lynch forced BoA to take an additional $20 billion of Treasury capital and a $118 billion loan-loss guarantee, as the investment bank was reeling under sizeable losses.
As a result of the flawed transaction, he was removed from his dual role as Chairman and CEO at the bank’s annual general meeting in May this year. Speaking before a Congressional hearing, Mr. Lewis said that the investment bank’s losses mounted immediately after the acquisition.
Speaking at a fiery hearing on Capitol Hill, Mr. Lewis said: “I believe that committed people of good intentions, in both the private sector and the government, worked desperately hard in late 2008 to prevent a collapse of the global financial system that would have resonated throughout the global economy. Even six months later, it is easy to forget just how close to the brink our system came. I will never forget, and I believe those efforts will be well remembered long after any current controversy is forgotten.”
