certainly the merrill lynch acquisition in particular came with risk. some materialized in 2008. the merrill lynch acquisition also came with a promise of significant long-term rewards. rewards bank of america and shareholders are already beginning to reap. we put together an organization already producing substantial profits, not losses, for o company. understanding that fact is absolutely critical to understanding why we acquired merrill lynch. we really bought two businesses. the first is the world's most productive brokerage force. currently 14,000 financial advise advisers. top 100, top 1,000 and top 100 women financial advisers than any other firm. the second major business was investment banking and serving institutional investments. the results here are nothing short of remarkable. as for the first quarter of 2009 bank of america and merrill lynch was first in underwriting high yield debt. second in underwriting investment grade corporate debt. fifth in -- in the first quarter of 2009 bank of america earned $4.2 million. merrill lynch contributed $3.7 billion for 75% of th

we also made two significant acquisitions, countrywide and merrill lynch. there does not appear to be any debate that these acquisitions were in the best interest of the financial system, the economy and the country. the failure of countrywide would have caused a massive loss and could have destabilized an already upset market. the failure of merrill lynch could have necessitated an a.i.g. style baitout. these were also in the best interest of bank of america and its share holders. certainly the merrill lynch acquisition came with risks some of which materialized in the fourth quarter when merrill lynch recognized significant losses. the marle lynch acquisition also came with the promise of significant long-term rewards, that we were already

of congress where he said secretary paulson informed that he made the threat dealing with merrill lynch acquisition at the request of chairman bernanke. we also have the e-mail from the richmond fed chairman, just had a talk with mr. bernanke says it is irrelevant because not credible intends to make it more clear if they played the card and need assistance management is going oregon, excuse me. and then the third 1i would point out is the e-mail from mr. and willow at the new york fed, which deals with the disclosure concern. also this is in december of last year where he says i fink i will ask merrill lynch a current estimate and he makes the statement if i get a sense merrill lynch is leaning toward a january fall when i will steer them to a leader. but i am trying to figure out is we have all this pattern here which as i asked mr. lewis when he was here if what took place at the october 13th had an impact on his decision making, his fault process as he moves through this dealing in december with you and treasury relative to the merrill lynch acquisition do you see how a reasonable person could

it was approved by the shareholders of bank of america and merrill lynch on december 5th. the acquisitionwas scheduled to be closed on january 1, 2009. as you know, the period encompassing bank of america's decision to acquire merrill lynch to the consummation of the merger was one of extreme stress in the financial markets. the government sponsored enterprises fannie mae and freddie mac were taken into conservatorship the week before the bank of america deal was announced. that singly lehman brothers build an american international group was prevented from failing by extraordinary government action. he that month wachovia faced liquidity pressures which spread its viability in result of an acquisition by wells fargo. in mid october an aggressive international response was required to avert a local-- global melt them. in of them for the possible destabilization of citigroup was prevented by government action. in short the pig was one of the short risk for the global economy as well as bank of america and merrill lynch. on december 17th 2008 senior management of bank of america informed th

time that because of significant losses at merrill lynch for the fourth quarter of 2008, bank of america was considering not closing the merrill lynch acquisition. this information led to a series of meetings and discussions among bank of america, the regulatory agencies and the treasury. during these discussions bank of america ceo ken lewis told us the company was considering invoking a material adverse event clause in the acquisition contract nunez the mack and in its him to rescind its agreement to require merrill lynch. in responding to bank of america and these discussions i express concern that invoking it would entail significant risk not only for the financial system as a whole but also for bank of america itself for three reasons. first, in light of the extreme fragility of the financial system at that time, the uncertainties created by indication of the map but it triggered a systemic crisis that could well have destabilize bankamerica as well as merrill lynch. second, an attempt to invoke mack after public remarks by the management of bank of america about the benefits and the acquisition would cast doubt in the minds of financial m

just may not happen that way. >> now, i understood in your testimony you pointed out that merrill lynch acquisition was responsible for 75% of your last quarter's profits. are you aware of shareholders complaining about that acquisition as a result of that? >> no, sir, not now. >> okay. thank you very much. yield back. >> thank you, very much. i now yield to the gentleman from utah. for five minutes. >> thank you, mr. lewis, i appreciate you being here. looking at some notes here dated december 31st, these are your notes also looking at some notes taken by joe brice, the cfo at bank of america were taken on december 21st of 2008 about the attempt to pull -- use the mac clause and get out of the merrill lynch transaction. in the notes it says fire board of directors if you do it, irresponsible for country. tim g agrees. is tim g. i would assume would be timothy geithner? >> those are joe price's notes? >> yes. >> i would have to assume with you because they are his notes. >> based on your recollection of what was going on and based on the notes we see from the cfo that was there, fire board of direc

circumstances would make it difficult to describe i understood you pointed out that the merrill lynch acquisitions shannon was responsible for 75% of your last quarter's profits. are you aware that shareholders are complaining as a result of that? >> no,

today we are continuing our investigation of the bank of america acquisition with merrill lynch. this was a most unusual transaction. on september 15th, 2008 bank of america announced that it was purchasing merrill lynch, creating one of the nation's largest financial institutions. at the time, it was a merger negotiated between two private parties. design for the exclusive benefits of private shareholders and paid for exclusively with private money. for months later on january the 16th, 2009, the world discovered that merrill lynch had experienced a $15,000,000,000.4 quarter loss. most importantly, we discovered that the merger had taken place only after the federal government had committed to give bankamerica $20 billion in taxpayer money. in short, bank of america's acquisition on merrill lynch began in september, 2008 as a private business deal, and was completed in january of 2009 with a 20 billion-dollar tax bailout. what happened in the interim? it has been shrouded in secrecy but the broad outline is this. when bank of america urged its shareholders to approve the acquisi

strongly that the -- all the strategy issues that were being addressed prior to merrill lynch were being addressed by the acquisition of merrill lynch. >> have you made these financial studies available to the committee for its review? >> i don't know. i don't know what the committee has. >> so what you're saying is you did review financial statements from your adviser, those being whom, by the way? >> our financial advisers are us. >> so all internal. and on the basis of that, you decided that despite the knowledge of the $12 billion hole, it was prudent to proceed, correct? >> yes, sir. >> so whatever threat or whatever word it is we're going to use for mr. bernanke and mr. paulson interactions, you had come to an independent conclusion on the basis of financial review by your people that it still made sense for your shareholders to proceed, correct? >> no. as i recall, they were done in a context of the receiving the money. >> let's be clear. you're saying two things now, one you, did an independent financial analysis that said it would stretch out the payback time but it's still prudent to proceed but on the oth

bayh said that it's time to shine some light on the events surrounding bank of america's acquisition of merrill lynch. at this point i would say we have got a peek, not much, but we don't have full sunshine yet. i would make three observations before we close. number one. there are significant inconsistencies between what we have been told today, what we were told to weeks ago by ken lewis, and what the fed's internal e-mails seem to say. it is still unclear whether bankamerica will forced by the federal government to go through with the merrill deal or whether the ken lewis's pool what might have been the greatest shakedown in a long, long time. as a result of this hearing, we have learned the sec and the fdic played a role in this transaction as well. but as i indicated, we are going wherever the road leads us. so therefore let me say that we are going to talk to the sec and we are going to talk to the fdic. we are going to talk to former treasury, secretary hank paulson. he has agreed to appear before the committee in july and i look forward to that hearing. but we also need to hear from the fdic

when bank of america urged its shareholders to approve the acquisition of merrill lynch, there was no public disclosure of any problems with the transaction. having a deposition taken by the new york attorney general, mr. lewis testified that just nine days after the shareholder vote, he discovered a $12 billion loss at merrill lynch. mr. lewis said he told treasury secretary hank paulson that he was strongly considering backing out of the deal. according to mr. lewis, poles and ultimately told him that if he did not go through with the acquisition, he and the board would be fired. however, internal e-mail is we have obtained say they were very skeptical about mr. lewis's motives about backing out. federal chairman ben bernanke fought louis was using the merrill losses as a bargaining chip to obtain federal funds. other e-mail's revealed that federal analysts found a suspect that mr. lewis claimed to be surprised by the rapid growth of merrill lynch posted losses giving the clear signs in the dead. they noted that at a minimum, it calls into question the due diligence process. bankame

through the acquisition of merrill lynch, we put together what looks to be the preeminent investment bank and brokerage firm in the world, an organization that is already producing substantial profits, not losses for our company. understanding that fact is absolutely critical to understanding why we acquired merrill lynch. we bought really bought two businesses. the first is the world's most productive brokerage force. merrill lynch has more financial advisers listed in the top 100, top 10,000 and top women's advisers than any other firm. the second major business was investment banking and serving institutional investors. the results here are nothing short of remarkable. as of the first quarter of 2009, bank of america-merrill lynch was first in u.s. equity related underwriting, first in underwriting high yield debt, second in jirned writing investment grade corporate rat dead and fifth in global mna and u.s. mna. in the first quarter bank of america earned $4.2 blt. n the first quarter of 2009 bank of . . $4.2 million. merrill lynch contributed $3.7 billion for 75% of the first qua

later this morning, the ceo of bank of america will testify at a hearing looking into the acquisition of merrill lynch. this included $20 billion of federal aid. watch the coverage on c-span 3, and later we will bring you a house senate conference meeting as the members work out their differences on the supplemental spending bill for iraq and afghanistan. this is at 3:00 eastern time. >> a new report says that the u.s. military contracts in system in iran and afghanistan is still susceptible to waste and fraud. the commission on contrasting appeared before the subcommittee, this is one hour 45 minutes. >> the quorum being present the subcommittee on national security on wartime contract income interim findings and path for relook come tort. finance consent only the chairman and ranking member of e said committee be allowed to make opening statements and without objection sword. eyes finance consent the hearing record be kept open for five business days of members will be allowed to submit a written statement for the record. without objection, so ordered. good morning. i want to thank all of you for be

as i understand the bank of america acquired merrill lynch last september but at the time of that acquisition because of several relationships, bankamerica actually also bought black rock which now owns the majority share of bank of america. recently, that had to do with interrelationship between black rock and merrill lynch, as you know. recently the fed just hired black rock to execute at least four contracts, maybe five, to analyze and handle the troubled assets of at freddie mac and fannie mae, making black rock the dominant player in pricing these distressed assets. i am concerned that a black rock and its chief executive officer may not be fair and impartial in conducting these responsibilities because they in fact had been heavily involved in and venting, creating and trafficking in those instruments for most of the last two decades. indeed during the risk analysis associated with them and selling billions of them to the government of the united states. so one of my questions, mr. bernanke, is do you know what your mr. fink sold his first tranche to, do you know what your that occurred

significant losses in revenue or revenue production are grounds and of course merrill lynch has proved to be a profitable acquisition for bankamerica. why not negotiate a better price, that wasn't the issue that lewis raised. he was talking about breaking off the merger but i think that the walls of be very dangerous because the markets would have been faced with the uncertainty of whether the deal was going to go through merrill lynch would probably not be able to survive absent the support of bank of america said there would have been immediate problem with merrill lynch which would have created broad problems in the financial market. >> even if they threatened to do that in the context of negotiating? >> well, you can't negotiate anything unless you are willing to go through with your threat. and so therefore there would have to be a probability in the mind of market participants that in fact bank of america wouldn't go through. >> you think that would be considered a plus? >> it has been stabilizing as well, yes. >> and in consummating though, the merger as it was originally planned, didn't the bank of america s

acquisition that he made, accounting for 75% of the profits. i would suspect this in six months for one year from now. they would be acquiring this at merrill lynch. i do not know why we are spending our time to find out what happened between the 15th of september and january 1. . lot went over the dam and particularly in that spectacular two week period after september 15. i want you one, before you leave here, to tell this committee and the american people what kind of jeopardy the american system and the world system was in so we reiterate that moment that we weren't all a bunch of relaxed, confident people walking around confident people walking around making clear were making an emergency judgments, working 20 and 24 hours a day and not with the clearest hits in the world. is that correct? >> thank you are for that opportunity. september was an incredibly intense period a financial crisis. many of the largest firms came under severe pressure. the failing failure were important reasons why the world economy went into a nosedive that lasted for the entire second half or fourth quarter of 2008 in the first quarter of 2009. how the treasury, fed

merrill lynch last year. something went terribly wrong with the merrill lynch acquisition. nearly enough to bring bank of america down. taxpayers now own $45 billion in preferred shares and warrants in bank of america. that money was committed by the treasury department and the federal reserve. mr. lewis is here today as ceo of bank of america thanks to the commitment of those funds through the end of december 2008 and into early january, 2009. due to the secretive conduct with the fed addressing its current financial crisis, many questions about the bank of america merrill lynch deal and bailout have until today remained unanswered. some of the key questions have been were the merrill lynch losses that precipitated bank of america's distress call to the treasury on december 17th the first such accelerating losses bank of america observed at merrill lynch since agreeing to purchase the company? did they believe bank of a america had a credible case for abandoning the deal? did the federal reserve compel bank of america to complete the deal against its will. or did bank of a