WASHINGTON (Reuters) –
A congressional panel accused Bank of America Corp (BAC.N) on Tuesday of knowing about Merrill Lynch & Co's huge losses as early as November 2008, suggesting the bank lied to investors in saying it did not grasp the depth of the problems until the following month.
Democrats on the U.S. House Oversight and Government Reform Committee unveiled internal Bank of America documents they said show the bank was alarmed by the losses far before shareholders of both companies approved the merger last December 5.
The panel has for months been probing events leading up to the deal's completion on January 1. It has been trying to pinpoint when the bank knew Merrill was on its way to what would become a $15.8 billion loss. The panel has also been trying to determine whether Bank of America was prepared to try to stop the merger or seek government help to finish it.
On Tuesday, for example, the committee disclosed one handwritten note from an outside lawyer, dated November 12, 2008, that said Merrill "lost $7 billion in October."
The House committee is also investigating the government's role in encouraging the merger, which resulted in Bank of America receiving a $20 billion injection of taxpayer funds, on top of $25 billion it had previously obtained.
Tuesday's hearing was the committee's fourth to investigate the high-profile deal that occurred at the height of the U.S. financial crisis in late 2008.
Brian Moynihan, considered a frontrunner to replace outgoing Chief Executive Kenneth Lewis, was among those to testify at Tuesday's hearing.
Moynihan was the bank's general counsel when Bank of America closed its Merrill deal and is now the bank's retail banking chief.
Also testifying was Timothy Mayopoulos, the bank's general counsel until he was fired on December 10, 2008, and replaced by Moynihan.
Others to testify are two Bank of America directors, Charles "Chad" Gifford and Thomas May, who are part of a board committee to find Lewis' replacement.
Gifford is the former chief executive at FleetBoston Financial Corp, where he was Moynihan's boss. Bank of America bought FleetBoston in 2004.
The House panel has already questioned and faulted Lewis, Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson for how they handled the Merrill deal.
(Reporting by Rachelle Younglai and Jonathan Stempel, with additional reporting by Joe Rauch, editing by Matthew Lewis)
