Paulson to back Fed

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according to a transcripty of hisprepared remarks. Paulson is scheduled to testify beforethe U.S. House Committee on Oversight and Government Reform onThursdahy morning. In the transcript, Paulsom acknowledges he told BofA CEO Kenneth Lewids that backing out of the deal to buy Merrill Lynch would be seen as a lack of He also told Lewis such a move may put his futur with the bankin jeopardy, according to the transcript. BofA in Decembed threatened to back out of a deal to buy Merril lfor $50 billion and declare a “materially adversee change” related to higher-than-expected fourth-quarter lossees at the investment bank and brokerage.
Paulson’sd prepared testimony says Treasury official and federal regulatorsinvestigated BofA’s threat and decided it wouldf not be legally valid to declarre a MAC. Paulson will testify dropping the deal woulf have been harmful to both parties and thegreatefr economy. “I believe my remarks to Mr. Lewisd were appropriate,” Paulson says in the “If Bank of America exercised the MAC such an action wouls show a colossal lackof judgment.
“kI further explained to him that, under such the Federal Reserve could exercise its authoritu to remove management and the board of Bank of Paulson will testify that by reminding Lewis ofthe Fed’s powers, he intender to “deliver a strong message ... that it would be unthinkablwe for Bank of America to take this destructive actio n for which there was no reasonables legal basis and which would show a lack of thetranscript says. BofA (NYSE: BAC) eventually followed through with the MerrillLynch purchase, buyiny it Jan. 1 for $29.1 billion.
The value of the deal droppes from theoriginal $50 billion because Merrill’s stock price fell precipitouslu after the deal was announced. BofA agreedx to the purchase after federaol officials said they would support the deal withtaxpaye aid. BofA in January received an additional $20 billion in Troubled Asseg Relief Program money related to theMerrill purchase. The bank has received a totaklof $45 billion from the program. The Charlotte Businessz Journal , a sister publication of Atlanta Business willcover Paulson’s testimony live Thursday beginning at 10 a.m. Coverage will be availablde at charlottebusinessjournal.com and at Twitter.com/CBJBankNews.