Oversight Panel Subpoenas Fed Over Merrill Lynch Acquisition

Posted June 9, 2009 at 6:13pm

The House Oversight and Government Reform Committee subpoenaed the Federal Reserve on Tuesday over documents related to Bank of America’s acquisition of Merrill Lynch.Chairman Edolphus Towns (D-N.Y.) and ranking member Darrell Issa (R-Calif.) agreed to subpoena the Fed in anticipation of a Thursday subcommittee hearing relating to Bank of America’s forced takeover of Merrill Lynch in 2008. Under that agreement, the government provided Bank of America with $20 billion to help the bank complete the deal.The oversight panel has been investigating why the merger hinged on taxpayer dollars when it was first announced as a stock-only transaction. Tuesday’s subpoena seeks documents including e-mails, notes of conversations and other materials.“The marriage between Bank of America and Merrill Lynch was a shotgun wedding pushed by the Federal Reserve. Since the Federal Reserve refused to hand over documents critical to this investigation, the committee has issued a subpoena,— Issa said in a statement.The committee requested copies of the documents earlier this month, but the Fed has yet to hand them over.According to an advance copy of testimony, Bank of America CEO Kenneth Lewis will testify in Thursday’s hearing that taxpayer dollars became necessary for the acquisition after he learned of “significant, accelerating losses— at Merrill Lynch.Discussions with the Fed and the Treasury Department concluded with a mutual understanding that there were “serious risks— to proceeding without a cash infusion, states Lewis. Carrying out the transaction with government aid “was the better course.—