Bank of America has until noon today to answer a powerful Congressman’s questions about the merger with Merrill Lynch.
On Friday, Congressman Edolphus Towns sent a sternly worded letter instructing the bank to reveal by noon today when it became aware of the gigantic losses at Merrill Lynch.
BOFA didn’t tell shareholders about these losses, but used them to get a commitment from the federal government for additional bailout money. Now everyone wants to know what legal advice the executives and board members received about whether it had to disclose those developments to the bank’s shareholders.
Towns also told Bank of America it that it could not use attorney-client privilege when dealing with Congressional inquiries. Towns is the chairman of the House commiteee on Oversight and Government Reform.
The bank asked for an extension until Tuesday, when Towns is scheduled to meet with Ann Finucane, the bank’s chief strategy and market officer, according to the New York TImes. A spokesman for Towns yesterday said the Congressman had rejected the request and is sticking to his deadline. Which makes sense: Towns wants this information before he meets with Finucane.
Finucane is a powerful figure inside Bank of America. She is close to Ken Lewis and has played an important role in connection with the acquisition of Merrill. We reported that Finucane was responsible for the selection of Sallie Krawcheck to take over the Merrill Lynch brokerage.
In addition to the Congressional inquiry, the merger with Merrill is being examined by a federal judge in New York, New York State Attorney General Andrew Cuomo and the Securities and Exchange Commission. On Friday it was reported that the FBI was launching a criminal investigation of the merger.
Bank of America has said it worries that if it reveals its talks with lawyers about the merger to the Congressional committee it will be deemed to have waived them for the purposes of other investigations.