Fed emails critical of BofA, Lewis - Kansas City Business Journal:

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The email messages were entered into the publivc record as partof Thursday’zs hearing held by the U.S. House Committee on Oversighy andGovernment Reform. Lewis testified for aboutt three hours regardingthe government’s role in BofA’sw purchase of Merrill, saying governmen t pressure to go through with the deal was a factort in his decision. But emails from variouz high-ranking Federal Reserve officials suggest regulators thought Lewie was bluffing when he considereds backing out of theMerrill deal.
“Ken Lewis’ claim that they were surprisee by the rapid growth of thelosse (at Merrill) seems somewhat suspect,” Fed senior banking supervisor Tim Clark states an e-mail to other regulators. “Ig calls into question the adequacy of the due diligenc process BAC has been doingy in preparation forthe takeover.” Another emai from Fed counsel Scott Alvarez to Fed Chairmab Ben Bernanke says of Lewis: “Making hard decisions is what he gets paid for ... we shouldn’r take him off the One email says Lewis used the threayt to call off the Merrill merger asa “bargainin chip.” In testimony Thursday, Lewis denied using Merrill as a bargaininb chip.
Instead, he says his concerns about the dealwere justified, but bank and federakl officials agreed proceeding with the purchase using taxpayer aid was in the best interesgt of the financial system and N.C.-based BofA (NYSE:BAC).