any more. >> there were discussions about that with the u.s. treasury and the reserve? >> it was about announcing everything at once. am i understand, the timing is interesting, let's announced in january, not december. was there something critical that happened in january that made it better than december? >> a was not in agreement in december. -- there was not an agreement in december. >> among whom? >> among us, us, the federal reserve, and the treasury. >> there were discussions, but not agreement in december? >> yes. >> today and salt -- today involve the secretary of the treasury himself and the chairman of the federal reserve and yourself? >> yes, they did. >> in the agreement was let's hold off until january because we're not in agreement yet? >> we did not have an agreement, and we did not agree on all the details or the amounts.

have an agreement on the details or the amounts. >> were the reports that you were reluctant to accept t.a.r.p. funds true? >> i'm sorry, i couldn't hear. >> there was a report that you did it not want to accept t.a.r.p. funding. is that correct? >> it is true that we did not think we needed the t.a.r.p. funds at the time we were asked to take them. >> was there any connection between your reluctance in accepting them and the exhortation from secretary paulson at that time to accept them and the issue of don't disclose the $12 billion worth of losses you've just discovered? >> no. absolutely not. >> it never came up? >> no. >> why did you accept t.a.r.p. funds if you didn't think you needed them? >> because after hearing the various regulators, i felt like

given what they were saying about the potential of the deterioration in the economy that we should have a healthy fear of the unknown. >> how much in t.a.r.p. funds did you accept? >> $15 billion. >> that's a lot of money for insurance against the unknown. especially if your initial reaction was we don't need them. >> right. yes. but, if you then see that credit meltdown of epic proportions that happened in the fourth quarter, it may not have been such a big insurance policy after all. >> my time is almost up. one final question. greg curl replaced amy brinkley as boa's chief risk officer. given the fact that mr. curl fwaled to unless $12 billion of merrill lynch's losses, it is wise to have mr. curl be your chief risk officer? and did you approve of that decision? >> mr. curl didn't miss the instruments which caused the

loss. what happened is we did not anticipate the meltdown of such a significant proportions in the fourth quarter. so we -- he identified everything properly. no one thought things would get as bad as it did in the fourth quarter. and i made that decision. >> you made the decision that mr. kerl should go ahead and become the coo. >> i made the decision for him to become the cro. >> let me announce that we have two votes on the floor and that we will recess for until 12:30, we will be returning at 12:30 and of course continue the questions. so the committee is in recess until 12:30. [captions copyright national cable satellite corp. 2009]

[captioning performed by national captioning institute] >> the meeting will resume. may i remind the witness he is still under oath. we will have five minutes from the gentleman from california. >> thank you, mr. chairman. thank you mr. lewis fort and

during all this time. in your testimony, you stated nine days after the shareholders' vote approving the merger, you became aware of a significant accelerating losses at merrill lynch, raising concerns that the bank of america might want to avoid it finalizing the deal due to the revelation of m.a.c. ac. however, it is difficult to understand how this came as a complete surprise given reports by "the new york times" that shortly after the deal was announced in september, b of a a had quickly unstalled 200 people at merrill lynch to thoroughly review their books. were any of the 200 bank of

america employees responsible for analyzing merrill lynch aware of the potential for the $12 billion loss before you legendly discovered it in mid december? >> -- we did have people there and we did know that there were losses and that was clear both in our company and theirs. we can see that that was happening and there were rumors on the street that that was happening across all finance institutions and we saw evidence of that after the fourth quarter close because we saw most everybody had losses. the thing that caused us to be concerned was the acceleration that we saw when we got the numbers that we did on the 14th. >> did you feel that the reviews

of merrill lynch's books were thoroughly adequate? were they resaerchd analyzed adequately? >> yes, ma'am, i thought the due diligence was done adequately. we identified the instruments that we thought might have issues, if you have credit deterioration, but we did not expect the magnitude of the deterioration that occurred in the fourth quarter. >> so you're saying that you really weren't aware of the substantial loss before the shareholders' meeting on december 5th? >> no, ma'am. we saw losses but they seemed consistent with what we were are hearing about in the marketplace and consistent with what we were seeing at our company. it was only when we saw the acceleration that when we got the report, when we did, that caused the alarm. >> well, do you seesy think -- >> well, do you think if you had that knowledge before, you would have proceeded with that merger differently.

>> well, i can't, it's hard to predict what i would have done other than what we did when we had them. >> the scenario i just gave you, if you were aware, would you have proceeded differently? >> i don't know because it didn't occur that way. >> in testimony to the new york state attorney general andrew cuomo, you stated that you had been advised by representatives from the treasury department and the federal reserve not to disclose details of merrill lynch's difficult financial position. so why do you believe that representatives from the federal government would not want you to disclose knowledge you had of merrill lynch's increasingly dire economic position? >> during all of that time, there was never ever a time that

the federal reserve or the treasury department told me that we should not disclose something we thought would be a disclosable event. >> so there was never a time that you were told to hold back on this information? >> not as regards something that should be disclosed. >> okay. remember you're under oath. okay. despite the fact that the plan for a merger was announced on september 15th, 2008, there was no mention of the $20 billion capital injection from the government until january 16th. at what point during the negotiations between the b of a, merrill lynch and federal government was it determined that this money would be necessary for the merger to be finalized? >> the discussions around the

injection of the preferred stock took place after we went to the federal reserve and the treasury on the 17th. and so, during that time, we began to talk about various ways to inject capital and so-called fill the hole. we did not come to a conclusion about the amounts and nature of the structure until some time well into that first first weeks of january of 2009. >> thank you. my time is up. thank you. >> thank you very much, gentlewoman from california. just before i move to other member, let me just sort of ask a couple other questions. mr. lewis, did merrill lynch give you all the information that you needed to make a

decision, an informed decision? did you get all the material that you needed in order to be able to make an informed decision? >> yes, sir. they did. and we in fact not only were we looking at the data but we had an outside firm that looked at the data before, a company run by chris flowers who was looking at the data alongside of us and he had looked at their data some time ago, a few months before then and so they had a very good knowledge of the various instruments and securities. so we actually had two sets of eyes looking at that again, sir, it was not the fact that we didn't identify the securities, it was that we did not expect the credit to deteriorate like it did in the fourth quarter. >> so do you agree that the decision on whether to proceed with the merger was ultimately yours? it was yours? >> well, it was my recommendation to the board and it was mine and the board's

decision to go forward, yes, sir. >> thank you very much. i understand that we got out of rotation here. i understand with mr. connolly next and then go back to mr. jordan. congressman connolly. >> i was thinking, you need to follow -- >> no, no, no then we go to mr. jordan. you yield to him? >> i thank my colleague. briefly, he said. >> i have to get back to the floor. so i thank my colleagues an i thank the chair. mr. lewis, thank you look at the minutes of bank of america dated december 30, 2008. mr. lewis reported. those assurances of detailed notes with the federal regulators. it goes on to say that you discussed in detail, quote, the

commitment of the federal regulators to deliver assistance in the form of capital and 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. how do you reckoncile your 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

>> there was never a specific agreement with specific numbers of that sort. a took several more weeks before we could actually come to terms as to exactly what it would look like. >> it is your testimony that it is that failure to come to specific agreement in december, that is the reason the announcement was put off until january? >> with that, and the desire by the federal reserve and treasury to have an objective of having it all be able to be announced at one time, so it would not spook the capital markets because they were so fragile. >> final question, if i may, mr. chairman, was there any intentional reason not to put the agreement in writing? >> no, sir, because there was not enough specifics to put into

writing. >> at some point, there were? >> yes, sir, and that was in the first weeks of january the following year. >> i want to be clear, under oath, it is your testimony today there was no intentional evasion or reason to doubt that the agreement in writing? nobody had a conversation with the federal reserve or the bank of america, let's not put this in writing? 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 could 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. now, i'm going to ask you, mr. lewis, our investigation finds that mr. bernanke believed that your thought to invoke a mac was not credible. take a look at the following e-mail from chairman bernanke

dated december 21st 2008, i think the threat to use mac as a bargaining chip -- we don't see it as a likely scenario at all. you did get a specific amount of assistance when you dropped the threat to back out of your deal, isn't it true? >> yes, we did. >> tell the committee houp. >> $20 billion. >> you got the promise of 118 billion in asset protection for a combination of merrill and bank of america toxic assets. >> we hadn't settled on an amount until sometime -- the wrap wraz being considered. >> that was in addition to the 15 billion of t.a.r.p. moneys you received in october, 10 billion in t.a.r.p. you received upon acquiring merrill, is that right? >> we didn't sign the agreement on the wrap. >> contrary to your representations to the fed, you were concerned primarily about the losses at merrill lynch. merrill's losses were less than half of the problem you faced.

losses orng orng naturing at bank of america itself were larger. mr. lewis, please look at the following e-mail 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