Paulson Says He Threatened BofA Chief Executive

Paulson Says He Threatened BofA Chief Executive - 7/16/2009

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright © 2001
Stanford Law School

2009 News and Press Releases

SEARCH

News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Paulson Says He Threatened BofA Chief Executive
Staff Writer

Associated Press. July 16, 2009
_________________________________________________________________________

EXCERPT: Former Treasury Secretary Henry Paulson says he was justified last year in suggesting that Bank of America Corp.'s chief executive could lose his job if the bank backed out on plans to buy troubled Merrill Lynch. His admission, included in written testimony for a House hearing today, comes as Congress debates the government's role in managing financial firms that accept billions of dollars in aid. Bank of America Corp., which went through with the merger, ultimately accepted $45 billion in federal aid, including $20 billion to absorb the financial hit it took from acquiring Merrill Lynch & Co. Rep. Darrell Issa of California, the top Republican on the House Oversight and Government Reform Committee, said Paulson's testimony makes clear that the government became too involved and misused its power. "It is a threat to the foundations of our free society when government officials, acting in the midst of a crisis, use dire predictions of imminent disaster to justify their encroachment on our individual liberty and the rule of law," said Issa. In prepared testimony, Paulson said he told Bank of America CEO Kenneth Lewis last year that reneging on his promise to purchase Merrill would show a "colossal lack of judgment." Paulson said that "under such circumstances," the Federal Reserve would be justified in removing management at the bank. "By referring to the Federal Reserve's supervisory powers, I intended to deliver a strong message reinforcing the view that had been consistently expressed by the Federal Reserve, as Bank of America's regulator, and shared by the Treasury, that it would be unthinkable for Bank of America to take this destructive action for which there was no reasonable legal basis and which would show a lack of judgment," Paulson said. Paulson said he believed his remarks to Lewis were "appropriate."

Back to News page | Back to Archived News 2009 page | Back to Top

�