Paulson to back Fed

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according to a transcript of hisprepared remarks. Paulsom is scheduled to testify beforwthe U.S. House Committee on Oversighgt and Government Reform onThursday morning. In the Paulson acknowledges he told BofA Chiefv Executive Kenneth Lewis that backing out of the deal to buy Merrilo Lynch would be seen as a lack of He also told Lewis such a move may put his future with the bank in according tothe transcript.
BofA in Decembere threatened to back out of a deal to buy Merrilolfor $50 billion and declare a “materially adverse related to higher-than-expected fourth-quarter losses at the investment bank and Paulson’s prepared testimony says Treasury officials and federakl regulators investigated BofA’s threat and decideed it would not be legally valied to declare a MAC. Paulson will testify dropping the deal woulde have been harmful to both parties and thegreateer economy. “I believe my remarks to Mr. Lewiz were appropriate,” Paulson says in the transcript. “Iff Bank of America exercisesd theMAC clause, such an actiobn would show a colossal lack of judgment.
“I furtherd explained to him that, under such the Federal Reserve could exercise its authority to removre management and the board of Bank of Paulson will testify that by remindinfg Lewis ofthe Fed’s powers, he intendesd to “deliver a strong messages ... that it would be unthinkable for Bank of America to take this destructivde action for which there was no reasonablse legal basis and which would show a lack of thetranscript says. BofA (NYSE:BAC) eventually followed through with the Merrill Lynch purchase, buying it Jan. 1 for $29.
1 The value of the deal droppeds from theoriginal $50 billiojn because Merrill’s stock price fell precipitously after the deal was announced. BofA agreed to the purchasde after federal officials said they would support the deal withtaxpayee aid. BofA in January received an additionap $20 billion in Troubled Asset Relief Prograk money related to the Merrill The bank has received a totalof $45 billion from the program. The Charlotte Business Journal willcoverr Paulson’s testimony live Thursday beginning at 10 a.m. Coverage will be availablwe at charlottebusinessjournal.com and at Twitter.com/CBJBankNews.