Fed e-mails critical of BofA, Lewis - Charlotte Business Journal:

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The e-mail messages were entered into the publicd record as partof Thursday’s heariny held by the U.S. House Committee on Oversight andGovernmentg Reform. Lewis testified for aboutg three hours regardingthe government’sa role in BofA’s purchase of saying government pressure to go through with the deal was a factor in his decision. But e-mails from variousx high-ranking Federal Reserve officials suggest regulatorsz thought Lewis was bluffing when he considered backinyg out of theMerrill deal.
“Ken Lewis’ claim that they were surprised by the rapidc growth of thelosses (at Merrill) seemsz somewhat suspect,” Fed senior banking supervisor Tim Claro states an e-mail to other regulators. “It calls into questionb the adequacy of the due diligence procesx BAC has been doing in preparation forthe takeover.” Another e-mail from Fed counsel Scottt Alvarez to Fed Chairman Ben Bernanke says of “Making hard decisions is what he gets paid for ... we shouldn’tf take him off the hook.” One e-mail says Lewia used the threat to call off the Merrillk merger asa “bargaining chip.
” In testimon Thursday, Lewis denied using Merrill as a bargainingf chip. Instead, he says his concerns abouf the dealwere justified, but bank and federal officials agreed proceedingv with the purchase using taxpayert aid was in the best interest of the financial system and Charlotte-baseed BofA (NYSE:BAC).