Bank of America Lied Says New York AG

[G_j]

http://www.care2.com/causes/politics/blog/bank-of-america-lied-says-new-york-ag/


Bank of America Lied Says New York AG
posted by: Jessica Pieklo

For those who had their suspicions that the Bush administration bank bailout program was nothing more than another gold rush for Wall Street, this week likely did nothing to ease those doubts. On February 4th New York Attorney General Andrew M. Cuomo and Special Inspector General for the Troubled Asset Relief Program (TARP) Neil Barofsky sued Bank of America, its former CEO Kenneth D. Lewis, and former CFO Joseph L. Price for fraud in connection with Bank of America's merger with Merrill Lynch.

The allegations come on the heels of a settlement with the Securities and Exchange Commission who also challenged the deal. According to this most recent suit, Bank of America's management intentionally failed to disclose massive losses at Merrill Lynch so that shareholders would vote to approve the merger. The timeline of the Merrill Lynch/Bank of America deal is important in that it acts as a snapshot of the ballooning financial crisis and illustrates the level of greed and avarice that nearly brought down the entire US financial services industry.

On September 15, 2008 Bank of America announced its plan to by Merrill Lynch and scheduled a shareholder vote to approve the transaction for December 5, 2008. By the time the approval vote was to actually happen Merrill had incurred over $16 billion in actual losses--losses known to top management at Bank of America. Not only did Lewis and others at Bank of America know about these losses, they knew more were on the way.

As directors and officers of Bank of America, Lewis and Price had fiduciary obligations to disclose this information to Bank of America shareholders before they voted on whether or not to approve a merger with Merrill Lynch. But rather than disclose this information, as required by law, they hid the losses so that the shareholders would approve the merger. Which they did.

Once the shareholder vote was secure Lewis ran to the federal government to subsidize the losses. According the the suit, Lewis then misled federal regulators by telling them that Bank of America couldn't complete the merger without an extraordinary taxpayer bailout to cover the Merrill losses. If the government didn't give Bank of America the money to cover the Merrill losses, Bank of America said it would walk away from the merger, citing a materially adverse change in Merrill's financial condition as justification for abandoning the deal.

..more..

[SmileyRose]

1. I'm shocked -- shocked I tell ya.

Bank of America lied? Who could guess?

































:sarcasm: (obviously)

[AndyA]

2. I know that there's more bad news about BoA coming.

The BoA where I've been banking (will be closing that account soon, have stopped putting money in it), used to have a television on CNN in the area where customers waited to see tellers. When the banking crisis hit, the TV was turned off.

Now, the TV has been removed. I asked the teller what the deal was, and she said they were told to turn it off so customers waiting in line to do business wouldn't hear negative news about BoA. Now that it's been removed, well, it's obvious that there's more bad news forthcoming.

I am going to be thrilled to close that account.

[dixiegrrrrl]

3. Notice how the charges have been framed.

"According the the suit, Lewis then misled federal regulators "
meaning they have no intentions of holding the regulators accountable.

but
then there is this:
"If the government didn't give Bank of America the money to cover the Merrill losses, Bank of America said it would walk away from the merger, citing a materially adverse change in Merrill's financial condition as justification for abandoning the deal."

which means the Bank DID tell the government there was a legal problem in the sale, but no one
IN the government bothered to blow the whistle.

So BOA "misled" regulators but told the Treasury the truth?
And Treasury did not blow the whistle on an illegal deal
( the materially adverse change in Merrill's financial condition) ?

Hmmmm...who regulates Treasury?

[G_j]

4. good catch

yes, that's what it looks like.