via Barry Ritholtz
Q: At the point in time of this board meeting, though, you were relating to the board that you felt you had a commitment from the Fed and the Treasury to make good on whatever harm is caused by the increased losses at Merrill Lynch; is that right?
A: I had verbal commitments from Ben Bernanke and Hank Paulson that they were going to see this through, to fill that hole, and have the market perceive this as a good deal.
Q: Did you ask anyone to look into whether the oral, verbal commitments from the Fed and Treasury were enforceable?
A: No. I was going on the word of two very well respected individuals high up in the American government.
Q: Wasn’t Mr. Paulson, by his instruction, really asking Bank of America shareholders to take a good part of the hit of the Merrill losses?
A: What he was doing was trying to stem a financial disaster in the financial markets, from his perspective.
Q: From your perspective, wasn’t that one of the effects of what he was doing?
A: Over the short term, yes, but we still thought we had an entity that filled two big strategic holes for us and over the long term would still be an interest to shareholders.
Q: What do you mean by “short term”?
A: Two to three years.
Q: So isn’t that something that any shareholder at Bank of America who had less than a three-year time horizon would want to know?
A: The situation was that everyone felt like the deal needed to be completed and to be able to say that…
Q: When you say “everyone,” what do you mean?
A: The people I was talking to, Bernanke and Paulson.
Q: Had it been up to you would you made the disclosure?
A: It wasn’t up to me.
Q: Had it been up to you.
A: It wasn’t
Q: Why do you say it wasn’t up to you? Were you instructed not to tell your shareholders what the transaction was going to be?
A: I was instructed that “We do not want a public disclosure.”
Q: Who said that to you?
A: Paulson
Q: Did anyone consider that the oral agreement was a commitment for financing, so under SEC rules there had to be a disclosure?
A: I did not. That’s all I can tell you.
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head over to The Big Picture for the rest of the juicy post…
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