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Did Paulson Tell Ken Lewis To Keep Quiet?
Topic Started: Apr 24 2009, 04:13 AM (227 Views)
QuirtEvans
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I Owe It All To John D'Oh
According to Ken Lewis, Paulson and Bernanke threated to remove B of A management if they backed out of the Merrill deal, and Paulson instructed Ken Lewis not to make public disclosure about the potential effects of the merger.

Quote:
 
According to Cuomo, after learning on Dec. 14 of "staggering" losses at Merrill, Lewis told Paulson that the bank was considering backing out of the merger under a clause allowing companies to exit deals if a "material adverse event" occurred.

Lewis informed board members in a Dec. 22 meeting that they would be removed if the bank backed out. Lewis also told the board that Bernanke had spoken with other regulators, including incoming Treasury officials of the Obama administration, and that all parties had pledged their commitment to provide additional government funds to help Bank of America absorb losses from Merrill's toxic assets.

Days after the deal closed on Jan. 1, Bank of America reported a $15 billion loss, and received $20 billion in government bailout funds on top of the $25 billion it had already received.


http://www.washingtonpost.com/wp-dyn/content/article/2009/04/23/AR2009042302461.html?hpid=topnews

It would be very interesting indeed to watch the SEC go after a former Secretary of the Treasury for aiding and abetting securities laws violations. I can't imagine that it will happen, though.

Oh, and where did Paulson get the authority to do this? According to him, he didn't have the authority.

Quote:
 
n a series of interviews last year, Paulson acknowledged he often had to force firms to bend to his will to prevent the banking system from collapsing. Those actions required him to stretch the boundaries of his authority as Treasury secretary, he said.

"Even if you don't have the authorities -- and frankly I didn't have the authorities for anything -- if you take charge, people will follow," Paulson said in the interviews. "Someone has to pull it all together."
It would be unwise to underestimate what large groups of ill-informed people acting together can achieve. -- John D'Oh, January 14, 2010.
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Mikhailoh
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If you want trouble, find yourself a redhead
It's an interesting situation - when does 'taking charge' become coercion? Is it criminal? Apparently Paulson has said that yes, he did as described.

Stay tuned - we haven't heard the last of this.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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QuirtEvans
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I Owe It All To John D'Oh
I doubt there will be any official action taken, because two of the three co-conspirators are still in office, and I doubt Obama will want to see Bernanke and Geithner sucked into this morass.

However, Obama can't stop private lawsuits.
It would be unwise to underestimate what large groups of ill-informed people acting together can achieve. -- John D'Oh, January 14, 2010.
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Mikhailoh
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If you want trouble, find yourself a redhead
I suspect you are right, but there are a whole lot of pissed off BofA investors.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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ivorythumper
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FFS. If true, Paulson and Bernake ought to go to jail.
The dogma lives loudly within me.
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Mark
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HOLY CARP!!!
Most of the government should be in jail.
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Mikhailoh
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I don't know if I agree, IT. It remains to be seen how all this shakes out, and I really hate to come down on anyone who actually exhibits leadership in dire times.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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jon-nyc
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Quirt - I seem to remember a few months back arguing that Treasury coerced banks into taking Tarp funds. Didn't you take the contrary view, saying Treasury didn't have the power?
In my defense, I was left unsupervised.
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QuirtEvans
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jon-nyc
Apr 25 2009, 04:05 AM
Quirt - I seem to remember a few months back arguing that Treasury coerced banks into taking Tarp funds. Didn't you take the contrary view, saying Treasury didn't have the power?
what I said was a little more nuanced. I said Paulson didn't have the power unless they allowed him to pressure them.

If I'd been Lewis, I'd have made Paulson put it in writing ... which he would not have done. Or I'd have gone public.
It would be unwise to underestimate what large groups of ill-informed people acting together can achieve. -- John D'Oh, January 14, 2010.
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jon-nyc
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QuirtEvans
Apr 25 2009, 05:39 AM
If I'd been Lewis, I'd have made Paulson put it in writing ... which he would not have done. Or I'd have gone public.
Yeah, but you lack the temperament to ever be in charge of anything. :silly:
In my defense, I was left unsupervised.
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Mikhailoh
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If you want trouble, find yourself a redhead
That depends on the situation, now, doesn't it? Popular? Maybe not. Effective? That depends. If tenacity is key to success in a givens situation, Quirt would do just fine.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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jon-nyc
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Cheers
It is remarkable, though, what happened. Paulson basically ordered Lewis to sacrifice his shareholders equity for what he perceived to be the common good.

And Lewis did it. (not for the common good, but for his own)


As I've said all along, Lewis should have been fired long ago. Not by the government, of course, since he helped them out so much. But by his shareholders.

It might happen this week.

I think their board meeting is Tuesday.
In my defense, I was left unsupervised.
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jon-nyc
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Mikhailoh
Apr 25 2009, 06:06 AM
That depends on the situation, now, doesn't it? Popular? Maybe not. Effective? That depends. If tenacity is key to success in a givens situation, Quirt would do just fine.
I was just giving him some sh1t, I think he'd do fine.
In my defense, I was left unsupervised.
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Mikhailoh
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If you want trouble, find yourself a redhead
Tarred and feathered is more likely.

Edit: Lewis, that is. :lol2:
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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