4/23/09 Cuomo Letter  

Today, an official letter from NYAG Cuomo addressed to Sen. Dodd, Rep. Frank, SEC Chair Schapiro, and Rep. Warren was sent because facts in the AG’s investigation “raise questions about the transparency of the TARP.”  The report goes on to describe the details of BoA’s reaction to the massive losses at Merrill which soured the merger deal in the eyes of BoA’s board and CEO Lewis.  After consulting with counsel, Lewis was going to move to have a Material Adverse Event (MAC) clause executed to stop the merger.  Paulson apparently pressured Lewis to not invoke the MAC.  Paulson also added, however, that he made this threat at the request of Ben Bernanke. This contradicts Bernanke, who earlier denied (through a Fed spokesman) that he did not threaten Ken Lewis. HOWEVER, Hank Paulson later recanted what he told Andrew Cuomo, which was that Ben Bernanke asked him to threaten to oust Ken Lewis and the Bank of America board if Lewis decided not to go forward with the Merrill deal. Paulson says his words were his own and that Bernanke did not ask him to convey a specific message to Lewis, CNBC says. Bernanke has hidden under the cloak of the bank examination privilege and thus the NYAG has not found out whether or not Bernanke, Geithner or other members of the Fed may have played a role in the pressuring BoA to close the deal with Merrill.  

IF you lost any money on BoA shares since the announcement of the merger with Merrill, you might want to consult an attorney to see if you have a civil suit against any of the parties that MIGHT have obstructed Mr Lewis from executing his fiduciary responsibilities under color of law or by coercion under color of law.  Note:  I am not an attorney, I never played one on TV, and I didn’t sleep in a Holiday Inn Express last night.  I think IF these allegations have merit, a class action suit might be worth considering. 

Stay tuned.