The Cuomo investigation into the Bank of America-Merrill Lynch merger is getting messier by the day.
In response to yesterday’s Cuomo’s ultimatum regarding Bank of America’s incessant use of its attorney-client privilege which Cuomo says has “hindered the investigation,” today, the bank’s outside attorney is firing back with a letter of his own.
In the vitriolic letter, BofA attorney Lewis Liman calls Cuomo’s allegations “spurious” and said the bank never hid behind its lawyers to keep information from investigators.
He says he was extremely surprised and disappointed by Cuomo’s letter, whose basic premise “is simply wrong.”
What Liman says in essence is that BofA always played by the rules, disclosed what it had to disclose, when it had to disclose it and he comes to the conclusion that “We can only interpret your office’s allegations as reflecting a frustration that the truth does not fit its preconceived notions. “
Ah the truth. After countless Congressional rounds of testimony from Bank of America CEO Lewis, former Merrill chief John Thain, Fed chair Ben Bernanke and Hank Paulson on the matter where everyone contradicted everyone else, after an endless passing of the buck and an ongoing investigation, you have to admire Liman’s guts to use this as a shield, though. Does anyone really think we have a grasp on the truth of what happened?
Liman scolds Cuomo for “the erroneous suggestion” that Bank of America decided against invokng the material adverse effect clause “when the jobs of its officers and directors were threatened by senior federal regulators.”
“Bank of America decided not to invoke the MAC clause because that determination was in the best interests of Bank of America’s shareholders,” Liman writes.
Just as a reminder, former Treasury Secretary Hank Paulson acknowledged in Congressional testimony in July that he had told Lewis in December that if the bank were to invoke the MAC clause, the Fed would remove BofA’s management and board. An assertion that Paulson qualified in his testimony as “appropriate,” as such an action would show a “colossal lack of judgment and would jeopardize Bank of America, Merrill Lynch and the financial system.”
Liman says that Bank of America shareholders just didn’t need to know about the losses in order to decide whether they wanted to go ahead with the acquisition of Merrill. “With respect to the issue of disclosure of Merrill Lynch’s forecasted losses in the fourth quarter of 2008, Bank of America’s position has been that the forecasts were not appropriate for disclosure, especially in light of among other thing, the extensive risk disclosures Bank of America and Merrill Lynch had already issued,” he writes.
Read Liman’s letter:
Read Paulson’ s testimony: