ank of America CEO Ken Lewis has taken a lot of heat for agreeing to buy Merrill Lynch last year, said Ed Morrissey in Hot Air, right before Merrill disclosed huge losses. Turns out it wasn’t his fault. According to e-mails released when Lewis appeared before a House panel Thursday, Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson used “extortion and intimidation” to push Lewis to complete the merger, improperly interfering in a private business transaction.
Paulson and Bernanke “strong-armed Lewis”? said David Weidner in MarketWatch. “Good for them.” Maybe they shouldn’t have used “hardball tactics” to save the merger, but the deal had to go through, and smoothly, to prevent a “nuclear blow” to the then-fragile markets. Besides, Lewis is also at fault, for “pulling the trigger on a deal without proper due diligence on a clearly troubled Merrill.”
To be fair to Lewis, there was no time for due diligence on a bank of Merrill’s size over “one frantic weekend,” said Felix Salmon in Reuters. And it wasn’t unreasonable of him to think he could “wiggle out” if, as happened, Merrill had a “monster black hole” in its books. But no one made him “buckle” under Bernanke and Paulson’s threats to fire him. He should have been willing to sacrifice his job instead of his shareholders.
Lewis was bluffing that he could legally back out of the merger, said Steven Davidoff in The New York Times. He would have “almost certainly” lost in court, and then he’d still have had to buy Merrill while also angering the government. Lewis’ complaints about intimidation seem like nothing but a “PR stunt to deflect responsibility.”
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