the yield to him? >> i thank my colleague. i will be brief. i have to get back to the floor. mr. lewis, if you look at the minutes of the bank of america did -- dated september 2008, this was a special meeting. starting at the top of page three, mr. lewis reported that management has obtained detailed oral assurances from the federal regulators with regard to their commitment and has documented those assurances with detailed notes of management's conversation with the federal regulators. you discussed in detail, the commitment of the federal regulators to deliver assistance in the form of capital and asset protection to the corporation. . . asset protection to the corporation. in the word commitment is used at least nine times, but just before the committee recessed for this vote in response to my

question, you said there was no agreement in december. in fact, you said that it was for lack of agreement in december that you decided to make the announcement in j january. and that all three parties, treasury, federal reserve and bank of america agreed to that. bank of america agreed to that. how testimony today with what you told the board on december 30th? >> we were working -- we had an agreement that we would work towards a solution. but during even from december 30th until the time that we signed the agreement, there was back and forth in terms of amounts in terms of structure and in terms of securities to be included in what was then called a wrap. so there was we had an agreement for a solution but we didn't have any kind of agreement as i would think of it as a business person. >> well, what about commitments? what was your understanding of the commitment? that word used nine times in those minutes. >> commitment to work toward a

solution. >> well, but it says that you -- you received as part of that commitment detailed oral assurances from the federal regulators with regard to their commitment. >> yes, sir. >> that sounds like more than a commitment to find a solution. that sounds like it's pretty pr detailed and we've already worked out the solution and i'm verbally sharing with you at the special meeting the nature of that commitment. >> no different structures had been talked about, different amounts have been talked about. there was a back and forth about different types of securities and different types of ways to go about filling the hole. but there was never a specific agreement with specific numbers and of that sort. it took several more weeks before we could actually come to terms as to exactly what it would look like.

>> it's your testimony that it's if a failure to come to a specific agreement in december, that's the reason the announcement was put off until january? >> that and the desire by for the federal reserve and the treasury to have an objective of having it all be able to announced at one time so that it would not spook the capital markets because they were so fragile. >> final question, if i may, was there any intentional reason not to put the agreement in writing? >> nos, because there was not enough specifics to put into writing. >> but at some point there were? >> yes,sir, and that was later. that was in the first few weeks of january of the following year. >> i want to be clear, under only it is your testimony today there was no intentional evasion

or reason to not put the agreement in writing? nobody had a conversation with treasury or the federal reserve or at the bank of america? let's not put this in writing right now? >> i can only -- i can only speak to what was happening at the time. i don't know what was said to everybody. but the two things that i would continue to say, no one, the goal was to get this done comprehensively so it was one time and would not shock the markets with something that was dangling that is needed and then secondly, we had not come to a final conclusion for several weeks. >> i yield back and thank my colleagues for their indulgence. >> thank you, mr. chairman. i know sitting there for three hours and answering questions is not the greatest thing in the world to be able to have to do. in my first round i asked about

whether you felt government and connection with the t.a.r.p. program, exercise any excessive influence and day to day operations and you said, your answer was no. but i want to go back to, and i'm taking this from a may 13th bloomberg news story, documents obtained by judicial watch relative to a meeting that you had with mr. paulson, mr. bernanke and mr. geithner and miss bear. did you and eight other bank ceos meet with them back in october 13th? >> yes, sir, we did. >> tell us what happened at the meeting. what the documents indicate is that you had -- we had a lot of conversation, discussion about the threat that's been talked about here by just about everyone relative to the mac

clause, but it looks like that there was maybe threats here or at least strong suggestions that you initially partake, participate in the t.a.r.p. program. can you tell me about what took place at that meeting and walk me through it, that october 13th meeting? >> the nine chief executives were called by hank paulson or at least i was -- >> let me interject. you said earlier, i believe, too, i forget which member's question, you initially felt your bank and your board did not need any infusion of cash or t.a.r.p. money from the government, is that right? >> yes. >> when did you make that decision as a bank, this obviously was prior to -- >> that's the first reaction that i had to the fact that we were being offered 15 billion

was that we didn't need it. the prior week we raised $10 billion in equity. and that it could be -- i'm speculating, but it cld have been that that's why we were offered 15 and not 25 like some of the other big banks were. but as you mentioned, the people that were there, on the other side of the table, there were nine of us, nine bank ceos and each of the people spoke about the possibility of detear y yoration in the economy. it is a little gray but i think it was secretary paulson then began to tell each bank what amount they should take. >> were you required to sign a form at that meeting? >> yes. what we -- >> what did the form say? >> it basically was a very short form that talked about the interest rate of the preferred

and the amount. in fact, we wrote in the amount, it was a blank. each individual wrote in -- >> you wrote in the amount but it was suggested by the treasury secretary. >> we were told what to write in. >> you did that at that meeting? you wrote in the amount at that meet sng. >> not until i called my executive committee. we talked about various things. >> how long did this meeting last? >> it wasn't -- i think it was less than an hour. but, again, it's been a while. >> less than an hour, nine banks decided to take billions of dollars? sign a form, you have to check with your board before you sign the form? >> no, no, we -- i ended up in a position, and i think most of my colleagues ended up thinking that if this group of people with the knowledge they have of the economy were saying that this may be necessary, you should take it, that we felt

like it was probably the right thing to do to have a healthy fear of the unknown. and so on that basis, i called my executive committee and got permission to sign it. >> okay. and did the events of that hour on that day in october, did that weigh on your mind fast forward a few more months in december when you were deciding or thinking about, i think your answer to me earlier was when you called secretary paulson and mr. bernanke and told them about the mac clause, you said you were seriously considering it. i think that was your answer to me earlier. did the events of that october, that one-hour meeting where they put a form in front of you, said you need to sign this and write in the amount, you'll participate whether you like it or not, did those events impact your decision in december when they said we don't want you to exercise the mac clause? >> i didn't correlate them or connect them in any way.

i was never thinking of that in relation to -- >> when you walked in the meeting in october -- >> request the consent to give the gentleman two more minutes. >> so moved. >> when you walked in the meeting on the 13th, did you know what it was about? did you know it was going to be -- they are going to ask us all of the t.a.r.p. dollars? >> no, i did not. >> you thought it was the general concern of the economy? >> i didn't know. but. >> what were the rumors on the street? what were the rumors on the street amongst your colleagues and the other big lending institutions? >> it was a weekend -- i think it was a monday was a holiday or something. i didn't hear a lot of things that -- in that time period, i don't know if it ever got out -- i did talk to at least one other person and he did not know

anything about it either. >> did anyone in the meeting expressny re -- express any reservations, anyone not sign it? >> not to my knowledge. >> anyone express reservations about not signing? >> one person. >> was that you? >> no, it was not i. >> okay. mr. chairman, thank you for the time, i have to run to a 1:00 meeting. i want to thank the witness for his patience and thoughtful answers. >> i yield to the gentleman from ohio again, this time mr. kucinich. >> thank you, mr. chairman. mr. lewis, we would hope a ceo would have a good memory and responsibility to take responsibilities for his actions. you stated in response to my previous question that you did not recall asking for a letter from the government stating that bank of america was ordered to

proceed with the purchase of merrill lynch. this is the linchpin of clarifying whether you were threatened by the fed or whether the fed was tough with you because you were threatening to be irresponsible. i want to direct your attention to an e-mail response from the fed's general council to chairman bernanke's e-mail which i previously disclosed. mr. chairman, says, i don't think it's necessary or appropriate for us to give lewis a letter along the lines he asked. first, we didn't order him to go forward. we simply explained our views and what the market reaction would be and left the decision to him. second, making hard decisions is what he gets paid for and only he has full information needed to make the decision so we shouldn't take him off the hook. by appearing to take the

decision out of his hands. i'm entering this into the record. >> without objection. >> mr. lewis, is it still your testimony that you don't recall asking for a letter to absolve you of your responsibility for a acquiring merrill lynch's huge losses? >> congressman, what i do remember is calling chairman bernanke and asking him if he could give us something in writing along the lines of what the solution would be. >> we're now updating mr. lewis's previous testimony -- this -- that may help you escape perjury but doesn't get away from the question of whether or not you were trying to absolve yourself of responsibility for acquiring merrill lynch's huge losses. we're talking about events that transferred a few months ago and the decision to withhold from

bank of america shareholders material information about the detear yoration of merrill lynch finances. it is about your responsibility and your failure to inform your shareholders could constitute a fundamental violation of security laws. i'll give you documentation, mr. chairman, that mr. lewis tried to deflect the matter to the fed by asking for a letter that they made him do it. our investigation finds that mr. bernanke believes -- i want to take a look at the following e- mail. "issing said surratt -- i think the threat to use it as a bargaining chip -- you did get a significant amount of assistantship when you dropped the threat?

isn't that true? >> yes, we did. >> tell me how much money you got. >> $20 billion. >> you got a promise of $18 billion. didn't you get that? >> we have not settled on an amount, but it was being considered. >> that was in the district. of the $15 billion in tarp money, $10 billion was for acquiring merrill. is that right? >> we never signed the agreement. >> our investigation finds that you were concerned about the losses of merrill lynch. narrows launches were -- losses were less than half of those days. -- merrill lynch's losses were less than half of those faced. dated december 18th, 2008, between officials at the new york fed. one report finding on the basis on the total of 13 basis points

detee yoration of the combined bank of america, merrill lynch entity, 16 basis points is due to bank of america. 14 basis points due to merrill lynch. the other officials described this as a smoking gun. isn't it true, more than half of the decline in your all important was not caused by merrill lynch? >> your apples and oranges. the securities -- >> maybe rotten apples and rotten apples. isn't it true you were told if you went through with the mac and later needed financial assistance from the government you wouldn't get it, isn't it true? >> repeat that, please. >> inthat if you went through t mac and later needed financial assistance from the government, wrnlts you told you wouldn't get it? >> i think i seen it in.

an e-mail. >> give the precarious amount of your balance sheet you believed at the time you could reasonably could need financial assistance from the government in the future? >> the preferred stock does nothing to help the tangible common equity ratio. >> you wouldn't think about it. if you got $15 billion on october and you're going to come back two months later and ask for another $20 billion. 15 and then 20 billion, does it it show -- doesn't that show that it really increased your tier one capital ratio, doesn't it show that? >> not tangible. >> tier one. >> tier one, yes. >> now, mr. lewis, the government believed that you knew or should have known about the merrill losses long before you said you did based on data that bank of america possessed and renally rereasonably revie

reviewed. the government didn't believe you but thought that merrill losses were less significant than the losses that bank of america was experiencing as a stand alone entity. the government even thought you were making the threat to use mac as a bargaining chip. the government had given you 25 billion before you approached it about merrill lynch. if the government believed all of that about you and your management team, were you surprised that the fed arranged for you to receive consider bl additional financial support in january, does that surprise you? >> we received 15 billion, not 25 billion from the original t.a.r.p. package. it did not surprise me they were willing to give us more. we talked about coming to a solution to get the merrill lynch deal done. >> there was a financial crisis and they thought it was necessary -- unanimous consent

for two more minutes. >> without objection. >> there was a financial crisis and they thought it was necessary for the system, for the deal to go through. if there's one thing about your record that's clear, you have experienced negotiating deals. what do you believe your leverage with the government was at the end of 2008? >> the only leverage i would say we had was that two honorable people had given me their word they would try their best to find a solution. >> isn't it true it was because bank of america was a big bank. if you hadn't been a ceo, been the top executive at the mid sized or small regional bank and acquired a similar size bank, do you think the federal regulator would have behaved in the same way? >> i don't think i have a favorite son from the e-mails you just read. >> if you were a smaller institution been taken over and

liquid ated? >> i can't speculate on that, sir. >> we have a large financial institution that doesn't face the same consequences for management of small ones and the fed had an opinion there was considerable evidence of mismanagement. there's been a misconception here that the government put a gun to the head of bank of america when it's quite possible it was the bank of america that put a gun to the head of the fed by threatening to invoke the mac and i think that this whole idea, mr. chairman, about mr. lewis somehow being a victim here, flies in the face of the fact that you were ceo of the largest bank and that you are pretending that you didn't ask for help from the government to take the burden off your back, that you didn't ask for a letter. you're going to have to excuse me. this is not credible, you're trying to change the scenario to you as a victim to you as a

powerful ceo that made a decision that denied your stockholders, your shareholders, material information that they needed provider to a vote on a merger. and i think that is the central point of this hearing and i'm sorry, that you haven't been forthcoming enough about that central point. yield back. >> well, one thing for sure, there was a shotgun marriage, shotgun wedding, no question about that. let me sort of raise this issue. on december the 22nd, 2008, mr. lewis you sent an e-mail to your board and let me quote, it says, i just talked with hank paulson. he said that there was no way the federal reserve and the treasury could send us a letter of any substance without public disclosure, which of course we

do not want. do you remember that? >> i do, yes, sir. >> you know, that sort of -- i was raising this because of the answer that you gave to my colleague from virginia, mr. connolly, i didn't get that point, that you actually sent that memo. i mean, it seemed to me that in his question that didn't come out. >> may i give you the context. >> sure. >> i had called mr. bernanke and said is there something you can give us in writing because my board is concerned that everything is verbal and we have nothing concrete and going in towards the end of the year and about to have to consummate this deal without anything in writing. he said let me think about it. and the next call i got was from hank paulson. and he told me that first of all, if they gave us any kind of agreement it would be so watered

down that the board would not find it satisfactory and secondly that they did not want disclosure. he was talking about the government not wanting to create a discloseable event and have to disclose, not bank of america. >> sure didn't make that clear with my colleague from virginia. let me move on. >> i apologize. >> congresswoman from ohio. >> mr. lewis, i've been here since this morning and find your testimony a bit disquieting today for some of the following reasons. bank of america owns 49.9% of black rock. but you seem not to know anything of its activities. number two, you are the person who was in charge when bank of america acquired countrywide over a year ago, but you

apparently weren't aware of its books and the losses inher ent in the purchase. number three, you are the ceo of the largest bank in the country and you seem to present yourself as having a rather hands off relationship with the federal reserve and the treasury. i find that somewhat incredulous. let me ask some follow-up questions. in terms of the purchase of black rock that was a part of your merrill lynch merger, it's my understanding that black rock now valued over $1.3 trillion. and that they've just received 5 no-bid contracts from the federal reserve, among them managing troubled subprime mortgages in the freddie mac and fannie mae portfolios.

the people of the united states have through the fed have propped up fanny and freddie to the tune of $200 billion. for the record, can you provide the contract that black rock has with the fed, particularly the one regarding the management of fannie mae and freddie mac's port fort yoes? >> i don't know if i can. we don't run black rock. we have two or three seats on the board, but don't have a ceo or chairman and he doesn't report to anyone in bank of america -- >> you own 49.9%. isn't that a strange relationship. >> we don't own 51%. that would be the difference. >> do you know how much black rock will earn from that contract with the federal reserve to manage fannie and freddie papers. >> no, i don't.

>> let me mention, "new york times" wrote the following, can a company being paid to sell troubled assets for the same kind of assets for private clients without showing preference and should the government seek counsel from a company that stand to make or lose billion fz the policies are enacted. can you outline how the bank of america will avoid conflict of interest in the mortgage portfolios and insider dealing charges as mortgage portfolios are resolved and bank of america mortgages are involved when black rock is actually the des ig knee to manage the portfolios on by half of the federal reserve. >> black rock would have to manage those with the client would have to manage anything like that. >> but obviously, bank of america, some of your mortgages are held by fannie mae and freddie mac, you were acquirer

of country wd, the largest subprime abuser in the country. >> and black rock would have to take that into account, yes. >> can you provide for the record the documents you may have at bank of america that contain or record the conflict of interest review undertaken by bank of america to ensure proper ethic as these mortgages are resolved. >> the conflict would be with black rock and the client, which would be freddie or fannie mae. countrywide is doing quite well and we have changed policies to become one of the most reputable in the country. >> there's a whole hearing on countrywide. >> it would be prebank of america. >> are any of the former countrywide staff on your staff of bank of america? >> there's some stuff but nobody in executive management.

>> i beg your pardon? >> we sent our ceo to run the company. >> mr. chairman it wouldn't be bad to hold a hearing on the relationship, black rock the countrywide and fannie mae and freddie mac and explore the interlocking relationships that you claim have no bearing on activities within your institution which sound very unusual as you state them before the committee today. i wanted to just in my second question here, relating to superior banks, which had the largest settlement in american history at the fdic in 2001, over $450 million as a result of their subprime activities in chicago and beyond including services by merrill lynch, which is how you would acquire the superior loans, troubled loans. let me ask you when bank of america acquired those loans,

did you audit them prior to reselling them to investors? >> i'm not sure of that transaction. i would have to get you somebody who was more familiar with the transaction. >> explain to us as head of this massive and important bank in our country, what is your plan for dealing with bad loans such as the superior loans that came to you through the fdic merrill acquisition? >> well to the extent that you have loans, you can rehabilitate, you do. to the extent that you can sell loans for discounts, you do. to the extent you can't do either, hold them on the books and at some point write them off. >> if you sell them to knowing investors enthey were bad loans, what happens? >> you would take a massive discount. the bank selling them would take a massive discount. >> i would like the paper trail, audit trail on the superior loans that your bank has been handling. >> thank you,