Time	Speaker	Text
00:00:03	>>	GEARING TO LEAVE THIS WEEKLY BRIEFLY WITH HOUSE MINORITY LEADER JOHN BOEHNER AND OTHERS. WE'LL HEAD BACK NOW TO THE RAYBURN HOUSE OFFICE BUILDING FOR THIS HOUSE HEARING ON LAST YEAR'S BANK OF AMERICA-MERRILL LYNCH MERGER. THIS IS LIVE COVERAGE ON C-SPAN 3.
00:00:04	Watson, Diane	ACCORDING TO YOUR TESTIMONY, YOU STATED THAT NINE DAYS AFTER THE SHAREHOLDERS' VOTE APPROVING THE MERGER, YOU BECAME AA WEAR OF SIGNIFICANT ACCELERATING LOSSES, THE MAC AT MERRILL LYNCH, RAISING CONCERNS THAT THE BANK OF AMERICA MIGHT WANT TO AVOID FINALIZING THE DEAL DUE TO THE REVELATION OF MAC. HOWEVER, IT IS DIFFICULT TO UNDERSTAND HOW THIS CAME AS A COMPLETE SURPRISE GIVEN REPORTS BY "THE NEW YORK TIMES" THAT SHORTLY AFTER THE DEAL WAS ANNOUNCED IN SEPTEMBER, B OF A A HAD QUICKLY UNSTALLED 200 PEOPLE AT MERRILL LYNCH TO THOROUGHLY REVIEW THEIR BOOKS. WERE ANY OF THE 200 BANK OF AMERICA EMPLOYEES RESPONSIBLE FOR ANALYZING MERRILL LYNCH AWARE OF THE POTENTIAL FOR THE $12 BILLION LOSS BEFORE YOU LEGENDLY DISCOVERED IT IN MID DECEMBER?
00:01:18	>>	-- WE DID HAVE PEOPLE THERE AND WE DID KNOW THAT THERE WERE LOSSES AND THAT WAS CLEAR BOTH IN OUR COMPANY AND THEIRS. WE CAN SEE THAT THAT WAS HAPPENING AND THERE WERE RUMORS ON THE STREET THAT THAT WAS HAPPENING ACROSS ALL FINANCE INSTITUTIONS AND WE SAW EVIDENCE OF THAT AFTER THE FOURTH QUARTER CLOSE BECAUSE WE SAW MOST EVERYBODY HAD LOSSES. THE THING THAT CAUSED US TO BE CONCERNED WAS THE ACCELERATION THAT WE SAW WHEN WE GOT THE NUMBERS THAT WE DID ON THE 14th.
00:01:56	Watson, Diane	DID YOU FEEL THAT THE REVIEWS OF MERRILL LYNCH'S BOOKS WERE THOROUGHLY ADEQUATE? WERE THEY RESAERCHD ANALYZED ADEQUATELY?
00:02:07	>>	YES, MA'AM, I THOUGHT THE DUE DILIGENCE WAS DONE ADEQUATELY. WE IDENTIFIED THE INSTRUMENTS THAT WE THOUGHT MIGHT HAVE ISSUES, IF YOU HAVE CREDIT DETERIORATION, BUT WE DID NOT EXPECT THE MAGNITUDE OF THE DETERIORATION THAT OCCURRED IN THE FOURTH QUARTER.
00:02:25	Watson, Diane	SO YOU'RE SAYING THAT YOU REALLY WEREN'T AWARE OF THE SUBSTANTIAL LOSS BEFORE THE SHAREHOLDERS' MEETING ON DECEMBER 5th?
00:02:31	>>	NO, MA'AM. WE SAW LOSSES BUT THEY SEEMED CONSISTENT WITH WHAT WE WERE ARE HEARING ABOUT IN THE MARKETPLACE AND CONSISTENT WITH WHAT WE WERE SEEING AT OUR COMPANY. IT WAS ONLY WHEN WE SAW THE ACCELERATION THAT WHEN WE GOT THE REPORT, WHEN WE DID, THAT CAUSED THE ALARM.
00:02:52	Watson, Diane	WELL, DO YOU SEESY THINK --
00:02:53	Watson, Diane	WELL, DO YOU THINK IF YOU HAD THAT KNOWLEDGE BEFORE, YOU WOULD HAVE PROCEEDED WITH THAT MERGER DIFFERENTLY.
00:03:00	>>	WELL, I CAN'T, IT'S HARD TO PREDICT WHAT I WOULD HAVE DONE OTHER THAN WHAT WE DID WHEN WE HAD THEM.
00:03:08	Watson, Diane	THE SCENARIO I JUST GAVE YOU, IF YOU WERE AWARE, WOULD YOU HAVE PROCEEDED DIFFERENTLY?
00:03:11	>>	I DON'T KNOW BECAUSE IT DIDN'T OCCUR THAT WAY.
00:03:16	Watson, Diane	IN TESTIMONY TO THE NEW YORK STATE ATTORNEY GENERAL ANDREW CUOMO, YOU STATED THAT YOU HAD BEEN ADVISED BY REPRESENTATIVES FROM THE TREASURY DEPARTMENT AND THE FEDERAL RESERVE NOT TO DISCLOSE DETAILS OF MERRILL LYNCH'S DIFFICULT FINANCIAL POSITION. SO WHY DO YOU BELIEVE THAT REPRESENTATIVES FROM THE FEDERAL GOVERNMENT WOULD NOT WANT YOU TO DISCLOSE KNOWLEDGE YOU HAD OF MERRILL LYNCH'S INCREASINGLY DIRE ECONOMIC POSITION?
00:03:53	>>	DURING ALL OF THAT TIME, THERE WAS NEVER EVER A TIME THAT THE FEDERAL RESERVE OR THE TREASURY DEPARTMENT TOLD ME THAT WE SHOULD NOT DISCLOSE SOMETHING WE THOUGHT WOULD BE A DISCLOSABLE EVENT.
00:04:09	Watson, Diane	SO THERE WAS NEVER A TIME THAT YOU WERE TOLD TO HOLD BACK ON THIS INFORMATION?
00:04:17	>>	NOT AS REGARDS SOMETHING THAT SHOULD BE DISCLOSED.
00:04:20	Watson, Diane	OKAY. REMEMBER YOU'RE UNDER OATH. OKAY. DESPITE THE FACT THAT THE PLAN FOR A MERGER WAS ANNOUNCED ON SEPTEMBER 15th, 2008, THERE WAS NO MENTION OF THE $20 BILLION CAPITAL INJECTION FROM THE GOVERNMENT UNTIL JANUARY 16th. AT WHAT POINT DURING THE NEGOTIATIONS BETWEEN THE B OF A, MERRILL LYNCH AND FEDERAL GOVERNMENT WAS IT DETERMINED THAT THIS MONEY WOULD BE NECESSARY FOR THE MERGER TO BE FINALIZED?
00:04:57	>>	THE DISCUSSIONS AROUND THE INJECTION OF THE PREFERRED STOCK TOOK PLACE AFTER WE WENT TO THE FEDERAL RESERVE AND THE TREASURY ON THE 17th. AND SO, DURING THAT TIME, WE BEGAN TO TALK ABOUT VARIOUS WAYS TO INJECT CAPITAL AND SO-CALLED FILL THE HOLE. WE DID NOT COME TO A CONCLUSION ABOUT THE AMOUNTS AND NATURE OF THE STRUCTURE UNTIL SOME TIME WELL INTO THAT FIRST FIRST WEEKS OF JANUARY OF 2009.
00:05:34	Watson, Diane	THANK YOU. MY TIME IS UP. THANK YOU.
00:05:37	>>	THANK YOU VERY MUCH, GENTLEWOMAN FROM CALIFORNIA. JUST BEFORE I MOVE TO OTHER MEMBER, LET ME JUST SORT OF ASK A COUPLE OTHER QUESTIONS. MR. LEWIS, DID MERRILL LYNCH GIVE YOU ALL THE INFORMATION THAT YOU NEEDED TO MAKE A DECISION, AN INFORMED DECISION? DID YOU GET ALL THE MATERIAL THAT YOU NEEDED IN ORDER TO BE ABLE TO MAKE AN INFORMED
00:06:03	>>	YES, SIR. THEY DID. AND WE IN FACT NOT ONLY WERE WE LOOKING AT THE DATA BUT WE HAD AN OUTSIDE FIRM THAT LOOKED AT THE DATA BEFORE, A COMPANY RUN BY CHRIS FLOWERS WHO WAS LOOKING AT THE DATA ALONGSIDE OF US AND HE HAD LOOKED AT THEIR DATA SOME TIME AGO, A FEW MONTHS BEFORE THEN AND SO THEY HAD A VERY GOOD KNOWLEDGE OF THE VARIOUS INSTRUMENTS AND SECURITIES. SO WE ACTUALLY HAD TWO SETS OF EYES LOOKING AT THAT AGAIN, SIR, IT WAS NOT THE FACT THAT WE DIDN'T IDENTIFY THE SECURITIES, IT WAS THAT WE DID NOT EXPECT THE CREDIT TO DETERIORATE LIKE IT DID IN THE FOURTH QUARTER.
00:06:44	>>	SO DO YOU AGREE THAT THE DECISION ON WHETHER TO PROCEED WITH THE MERGER WAS ULTIMATELY YOURS? IT WAS YOURS?
00:06:52	>>	WELL, IT WAS MY RECOMMENDATION TO THE BOARD AND IT WAS MINE AND THE BOARD'S DECISION TO GO FORWARD, YES, SIR.
00:07:00	>>	THANK YOU VERY MUCH. I UNDERSTAND THAT WE GOT OUT OF ROTATION HERE. I UNDERSTAND WITH MR. CONNOLLY NEXT AND THEN GO BACK TO MR. JORDAN. CONGRESSMAN CONNOLLY.
00:07:11	>>	I WAS THINKING, YOU NEED TO FOLLOW --
00:07:17	>>	NO ,, NO, NO THEN WE GO TO MR. JORDAN. YOU YIELD TO HIM?
00:07:23	>>	I THANK MY COLLEAGUE. BRIEFLY, HE SAID.
00:07:24	>>	I HAVE TO GET BACK TO THE FLOOR. SO I THANK MY COLLEAGUES AN I THANK THE CHAIR. MR. LEWIS, THANK YOU LOOK AT THE MINUTES OF BANK OF AMERICA DATED DECEMBER 30, 2008. MR. LEWIS REPORTED. THOSE ASSURANCES OF DETAILED NOTES WITH THE FEDERAL REGULATORS. IT GOES ON TO SAY THAT YOU DISCUSSED IN DETAIL, QUOTE, THE COMMITMENT OF THE FEDERAL REGULATORS TO DELIVER ASSISTANCE IN THE FORM OF CAPITAL AND ASSET PROTECTION TO THE CORPORATION. IN THE WORD COMMITMENT IS USED AT LEAST NINE TIMES, BUT JUST BEFORE THE COMMITTEE RECESSED FOR THIS VOTE IN RESPONSE TO MY QUESTION, YOU SAID THERE WAS NO AGREEMENT IN DECEMBER. IN FACT, YOU SAID THAT IT WAS FOR LACK OF AGREEMENT IN DECEMBER THAT YOU DECIDED TO MAKE THE ANNOUNCEMENT IN JAN JANUARY. AND THAT ALL THREE PARTIES, TREASURY, FEDERAL RESERVE AND BANK OF AMERICA AGREED TO THAT. HOW DO YOU RECKONONCILE YOUR TESTIMONY TODAY WITH WHAT YOU TOLD THE BOARD ON DECEMBER 30th?
00:08:34	>>	WE WERE WORKING -- WE HAD AN AGREEMENT THAT WE WOULD WORK TOWARDS A SOLUTION. BUT DURING EVEN FROM DECEMBER 30th UNTIL THE TIME THAT WE SIGNED THE AGREEMENT, THERE WAS BACK AND FORTH IN TERMS OF AMOUNTS IN TERMS OF STRUCTURE AND IN TERMS OF SECURITIES TO BE INCLUDED IN WHAT WAS THEN CALLED A WRAP. SO THERE WAS WE HAD AN AGREEMENT FOR A SOLUTION BUT WE DIDN'T HAVE ANY KIND OF AGREEMENT AS I WOULD THINK OF IT AS A BUSINESS PERSON.
00:09:06	>>	WELL, WHAT ABOUT COMMITMENTS? WHAT WAS YOUR UNDERSTANDING OF THE COMMITMENT? THAT WORD USED NINE TIMES IN THOSE MINUTES.
00:09:13	>>	COMMITMENT TO WORK TOWARD A SOLUTION.
00:09:19	>>	WELL, BUT IT SAYS THAT YOU -- YOU RECEIVED AS PART OF THAT COMMITMENT DETAILED ORAL ASSURANCES FROM THE FEDERAL REGULATORS WITH REGARD TO THEIR COMMITMENT.
00:09:30	>>	YES, SIR.
00:09:32	>>	THAT SOUNDS LIKE MORE THAN A COMMITMENT TO FIND A SOLUTION. THAT SOUNDS LIKE IT'S PRETTY PRETTY DETAILED AND WE'VE ALREADY WORKED OUT THE SOLUTION AND I'M VERBALLY SHARING WITH YOU AT THE SPECIAL MEETING THE NATURE OF THAT COMMITMENT.
00:09:49	>>	NO DIFFERENT STRUCTURES HAD BEEN TALKED ABOUT, DIFFERENT AMOUNTS HAVE BEEN TALKED ABOUT. THERE WAS A BACK AND FORTH ABOUT DIFFERENT TYPES OF SECURITIES AND DIFFERENT TYPES OF WAYS TO GO ABOUT FILLING THE HOLE. BUT THERE WAS NEVER A SPECIFIC AGREEMENT WITH SPECIFIC NUMBERS AND OF THAT SORT. IT TOOK SEVERAL MORE WEEKS BEFORE WE COULD ACTUALLY COME TO TERMS AS TO EXACTLY WHAT IT WOULD LOOK LIKE.
00:10:15	>>	IT'S YOUR TESTIMONY THAT IT'S IF A FAILURE TO COME TO A SPECIFIC AGREEMENT IN DECEMBER, THAT'S THE REASON THE ANNOUNCEMENT WAS PUT OFF UNTIL JANUARY?
00:10:28	>>	THAT AND THE DESIRE BY FOR THE FEDERAL RESERVE AND THE TREASURY TO HAVE AN OBJECTIVE OF HAVING IT ALL BE ABLE TO ANNOUNCED AT ONE TIME SO THAT IT WOULD NOT SPOOK THE CAPITAL MARKETS BECAUSE THEY WERE SO FRAGILE.
00:10:49	>>	FINAL QUESTION, IF I MAY, WAS THERE ANY INTENTIONAL REASON NOT TO PUT THE AGREEMENT IN WRITING?
00:10:56	>>	NOS, BECAUSE THERE WAS NOT ENOUGH SPECIFICS TO PUT INTO WRITING.
00:11:01	>>	BUT AT SOME POINT THERE WERE?
00:11:04	>>	YES,SIR, AND THAT WAS LATER. THAT WAS IN THE FIRST FEW WEEKS OF JANUARY OF THE FOLLOWING YEAR.
00:11:09	>>	I WANT TO BE CLEAR, UNDER ONLY IT IS YOUR TESTIMONY TODAY THERE WAS NO INTENTIONAL EVASION OR REASON TO NOT PUT THE AGREEMENT IN WRITING? NOBODY HAD A CONVERSATION WITH TREASURY OR THE FEDERAL RESERVE OR AT THE BANK OF AMERICA? LET'S NOT PUT THIS IN WRITING RIGHT NOW?
00:11:28	>>	I CAN ONLY -- I CAN ONLY SPEAK TO WHAT WAS HAPPENING AT THE TIME. I DON'T KNOW WHAT WAS SAID TO EVERYBODY. BUT THE TWO THINGS THAT I WOULD CONTINUE TO SAY, NO ONE, THE GOAL WAS TO GET THIS DONE COMPREHENSIVELY SO IT WAS ONE TIME AND WOULD NOT SHOCK THE MARKETS WITH SOMETHING THAT WAS DANGLING THAT IS NEEDED AND THEN SECONDLY, WE HAD NOT COME TO A FINAL CONCLUSION FOR SEVERAL WEEKS.
00:11:56	>>	I YIELD BACK AND THANK MY COLLEAGUES FOR THEIR INDULGENCE.
00:12:04	Jordan, James "Jim" D	THANK YOU, MR. CHAIRMAN. I KNOW SITTING THERE FOR THREE HOURS AND ANSWERING QUESTIONS IS NOT THE GREATEST THING IN THE WORLD TO BE ABLE TO HAVE TO DO. IN MY FIRST ROUND I ASKED ABOUT WHETHER YOU FELT GOVERNMENT AND CONNECTION WITH THE T.A.R.P. PROGRAM, EXERCISE ANY EXCESSIVE INFLUENCE AND DAY TO DAY OPERATIONS AND YOU SAID, YOUR ANSWER WAS NO. BUT I WANT TO GO BACK TO, AND I'M TAKING THIS FROM A MAY 13th BLOOMBERG NEWS STORY, DOCUMENTS OBTAINED BY JUDICIAL WATCH RELATIVE TO A MEETING THAT YOU HAD WITH MR. PAULSON, MR. BERNANKE AND MR. GEITHNER AND MISS BEAR. DID YOU AND EIGHT OTHER BANK CEOs MEET WITH THEM BACK IN OCTOBER 13th?
00:12:58	>>	YES, SIR, WE DID.
00:13:00	Jordan, James "Jim" D	TELL US WHAT HAPPENED AT THE MEETING. WHAT THE DOCUMENTS INDICATE IS THAT YOU HAD -- WE HAD A LOT OF CONVERSATION, DISCUSSION ABOUT THE THREAT THAT'S BEEN TALKED ABOUT HERE BY JUST ABOUT EVERYONE RELATIVE TO THE MAC CLAUSE, BUT IT LOOKS LIKE THAT THERE WAS MAYBE THREATS HERE OR AT LEAST STRONG SUGGESTIONS THAT YOU INITIALLY PARTAKE, PARTICIPATE IN THE T.A.R.P. PROGRAM. CAN YOU TELL ME ABOUT WHAT TOOK PLACE AT THAT MEETING AND WALK ME THROUGH IT, THAT OCTOBER 13th MEETING?
00:13:40	>>	THE NINE CHIEF EXECUTIVES WERE CALLED BY HANK PAULSON OR AT LEAST I WAS --
00:13:45	Jordan, James "Jim" D	LET ME INTERJECT. YOU SAID EARLIER, I BELIEVE, TOO, I FORGET WHICH MEMBER'S QUESTION, YOU INITIALLY FELT YOUR BANK AND YOUR BOARD DID NOT NEED ANY INFUSION OF CASH OR T.A.R.P. MONEY FROM THE
00:14:00	>>	YES.
00:14:02	Jordan, James "Jim" D	WHEN DID YOU MAKE THAT DECISION AS A BANK, THIS OBVIOUSLY WAS PRIOR TO --
00:14:09	>>	THAT'S THE FIRST REACTION THAT I HAD TO THE FACT THAT WE WERE BEING OFFERED 15 BILLION WAS THAT WE DIDN'T NEED IT. THE PRIOR WEEK WE RAISED $10 BILLION IN EQUITY. AND THAT IT COULD BE -- I'M SPECULATING, BUT IT COULD HAVE BEEN THAT THAT'S WHY WE WERE OFFERED 15 AND NOT 25 LIKE SOME OF THE OTHER BIG BANKS WERE. BUT AS YOU MENTIONED, THE PEOPLE THAT WERE THERE, ON THE OTHER SIDE OF THE TABLE, THERE WERE NINE OF US, NINE BANK CEOs AND EACH OF THE PEOPLE SPOKE ABOUT THE POSSIBILITY OF DETEAR YOR YORATION IN THE ECONOMY. IT IS A LITTLE GRAY BUT I THINK IT WAS SECRETARY PAULSON THEN BEGAN TO TELL EACH BANK WHAT AMOUNT THEY SHOULD TAKE.
00:15:01	Jordan, James "Jim" D	WERE YOU REQUIRED TO SIGN A FORM AT THAT MEETING?
00:15:04	>>	YES. WHAT WE --
00:15:06	Jordan, James "Jim" D	WHAT DID THE FORM SAY?
00:15:09	>>	IT BASICALLY WAS A VERY SHORT FORM THAT TALKED ABOUT THE INTEREST RATE OF THE PREFERRED AND THE AMOUNT. IN FACT, WE WROTE IN THE AMOUNT, IT WAS A BLANK. EACH INDIVIDUAL WROTE IN --
00:15:20	Jordan, James "Jim" D	YOU WROTE IN THE AMOUNT BUT IT WAS SUGGESTED BY THE TREASURY SECRETARY.
00:15:27	>>	WE WERE TOLD WHAT TO WRITE IN.
00:15:29	Jordan, James "Jim" D	YOU DID THAT AT THAT MEETING? YOU WROTE IN THE AMOUNT AT THAT MEET SNG.
00:15:33	>>	NOT UNTIL I CALLED MY EXECUTIVE COMMITTEE. WE TALKED ABOUT VARIOUS THINGS.
00:15:37	Jordan, James "Jim" D	HOW LONG DID THIS MEETING LAST?
00:15:40	>>	IT WASN'T -- I THINK IT WAS LESS THAN AN HOUR. BUT, AGAIN, IT'S BEEN A WHILE.
00:15:46	Jordan, James "Jim" D	LESS THAN AN HOUR, NINE BANKS DECIDED TO TAKE BILLIONS OF DOLLARS? SIGN A FORM, YOU HAVE TO CHECK WITH YOUR BOARD BEFORE YOU SIGN THE FORM?
00:16:00	>>	NO, NO, WE -- I ENDED UP IN A POSITION, AND I THINK MOST OF MY COLLEAGUES ENDED UP THINKING THAT IF THIS GROUP OF PEOPLE WITH THE KNOWLEDGE THEY HAVE OF THE ECONOMY WERE SAYING THAT THIS MAY BE NECESSARY, YOU SHOULD TAKE IT, THAT WE FELT LIKE IT WAS PROBABLY THE RIGHT THING TO DO TO HAVE A HEALTHY FEAR OF THE UNKNOWN. AND SO ON THAT BASIS, I CALLED MY EXECUTIVE COMMITTEE AND GOT PERMISSION TO SIGN IT.
00:16:25	Jordan, James "Jim" D	OKAY. AND DID THE EVENTS OF THAT HOUR ON THAT DAY IN OCTOBER, DID THAT WEIGH ON YOUR MIND FAST FORWARD A FEW MORE MONTHS IN DECEMBER WHEN YOU WERE DECIDING OR THINKING ABOUT, I THINK YOUR ANSWER TO ME EARLIER WAS WHEN YOU CALLED SECRETARY PAULSON AND MR. BERNANKE AND TOLD THEM ABOUT THE MAC CLAUSE, YOU SAID YOU WERE SERIOUSLY CONSIDERING IT. I THINK THAT WAS YOUR ANSWER TO ME EARLIER. DID THE EVENTS OF THAT OCTOBER, THAT ONE-HOUR MEETING WHERE THEY PUT A FORM IN FRONT OF YOU, SAID YOU NEED TO SIGN THIS AND WRITE IN THE AMOUNT, YOU'LL PARTICIPATE WHETHER YOU LIKE IT OR NOT, DID THOSE EVENTS IMPACT YOUR DECISION IN DECEMBER WHEN THEY SAID WE DON'T WANT YOU TO EXERCISE THE MAC CLAUSE?
00:17:12	>>	I DIDN'T CORRELATE THEM OR CONNECT THEM IN ANY WAY. I WAS NEVER THINKING OF THAT IN RELATION TO --
00:17:18	Jordan, James "Jim" D	WHEN YOU WALKED IN THE MEETING IN OCTOBER --
00:17:24	>>	REQUEST THE CONSENT TO GIVE THE GENTLEMAN TWO MORE MINUTES.
00:17:27	>>	SO MOVED.
00:17:28	Jordan, James "Jim" D	WHEN YOU WALKED IN THE MEETING ON THE 13th, DID YOU KNOW WHAT IT WAS ABOUT? DID YOU KNOW IT WAS GOING TO BE -- THEY ARE GOING TO ASK US ALL OF THE T.A.R.P. DOLLARS?
00:17:39	>>	NO, I DID NOT.
00:17:40	Jordan, James "Jim" D	YOU THOUGHT IT WAS THE GENERAL CONCERN OF THE ECONOMY?
00:17:46	>>	I DIDN'T KNOW. BUT.
00:17:49	Jordan, James "Jim" D	WHAT WERE THE RUMORS ON THE STREET? WHAT WERE THE RUMORS ON THE STREET AMONGST YOUR COLLEAGUES AND THE OTHER BIG LENDING INSTITUTIONS?
00:17:58	>>	IT WAS A WEEKEND -- I THINK IT WAS A MONDAY WAS A HOLIDAY OR SOMETHING. I DIDN'T HEAR A LOT OF THINGS THAT -- IN THAT TIME PERIOD, I DON'T KNOW IF IT EVER GOT OUT -- I DID TALK TO AT LEAST ONE OTHER PERSON AND HE DID NOT KNOW ANYTHING ABOUT IT EITHER.
00:18:16	Jordan, James "Jim" D	DID ANYONE IN THE MEETING EXPRESSNY RE -- EXPRESS ANY RESERVATIONS, ANYONE NOT SIGN IT?
00:18:27	>>	NOT TO MY KNOWLEDGE.
00:18:28	Jordan, James "Jim" D	ANYONE EXPRESS RESERVATIONS
00:18:30	>>	ONE PERSON.
00:18:32	Jordan, James "Jim" D	WAS THAT YOU?
00:18:33	>>	NO, IT WAS NOT I.
00:18:35	Jordan, James "Jim" D	OKAY. MR. CHAIRMAN, THANK YOU FOR THE TIME, I HAVE TO RUN TO A 1:00 MEETING. I WANT TO THANK THE WITNESS FOR HIS PATIENCE AND THOUGHTFUL ANSWERS.
00:18:46	>>	I YIELD TO THE GENTLEMAN FROM OHIO AGAIN, THIS TIME MR. KUCINICH.
00:18:54	Kucinich, Dennis	THANK YOU, MR. CHAIRMAN. MR. LEWIS, WE WOULD HOPE A CEO WOULD HAVE A GOOD MEMORY AND RESPONSIBILITY TO TAKE RESPONSIBILITIES FOR HIS ACTIONS. YOU STATED IN RESPONSE TO MY PREVIOUS QUESTION THAT YOU DID NOT RECALL ASKING FOR A LETTER FROM THE GOVERNMENT STATING THAT BANK OF AMERICA WAS ORDERED TO PROCEED WITH THE PURCHASE OF MERRILL LYNCH. THIS IS THE LINCHPIN OF CLARIFYING WHETHER YOU WERE THREATENED BY THE FED OR WHETHER THE FED WAS TOUGH WITH YOU BECAUSE YOU WERE THREATENING TO BE IRRESPONSIBLE. I WANT TO DIRECT YOUR ATTENTION TO AN E-MAIL RESPONSE FROM THE FED'S GENERAL COUNCIL TO CHAIRMAN BERNANKE'S E-MAIL WHICH I PREVIOUSLY DISCLOSED. MR. CHAIRMAN, SAYS, I DON'T THINK IT'S NECESSARY OR APPROPRIATE FOR US TO GIVE LEWIS A LETTER ALONG THE LINES HE ASKED. FIRST, WE DIDN'T ORDER HIM TO GO FORWARD. WE SIMPLY EXPLAINED OUR VIEWS AND WHAT THE MARKET REACTION WOULD BE AND LEFT THE DECISION TO HIM. SECOND, MAKING HARD DECISIONS IS WHAT HE GETS PAID FOR AND ONLY HE HAS FULL INFORMATION NEEDED TO MAKE THE DECISION SO WE SHOULDN'T TAKE HIM OFF THE HOOK. BY APPEARING TO TAKE THE DECISION OUT OF HIS HANDS. I'M ENTERING THIS INTO THE RECORD.
00:20:18	>>	WITHOUT OBJECTION.
00:20:23	Kucinich, Dennis	MR. LEWIS, IS IT STILL YOUR TESTIMONY THAT YOU DON'T RECALL ASKING FOR A LETTER TO ABSOLVE YOU OF YOUR RESPONSIBILITY FOR A ACQUIRING MERRILL LYNCH'S HUGE LOSSES?
00:20:38	>>	CONGRESSMAN, WHAT I DO REMEMBER IS CALLING CHAIRMAN BERNANKE AND ASKING HIM IF HE COULD GIVE US SOMETHING IN WRITING ALONG THE LINES OF WHAT THE SOLUTION WOULD BE.
00:20:51	Kucinich, Dennis	WE'RE NOW UPDATING MR. LEWIS'S PREVIOUS TESTIMONY -- THIS -- THAT MAY HELP YOU ESCAPE PERJURY BUT DOESN'T GET AWAY FROM THE QUESTION OF WHETHER OR NOT YOU WERE TRYING TO ABSOLVE YOURSELF OF RESPONSIBILITY FOR ACQUIRING MERRILL LYNCH'S HUGE LOSSES. WE'RE TALKING ABOUT EVENTS THAT TRANSFERRED A FEW MONTHS AGO AND THE DECISION TO WITHHOLD FROM BANK OF AMERICA SHAREHOLDERS MATERIAL INFORMATION ABOUT THE DETEAR YORATION OF MERRILL LYNCH FINANCES. IT IS ABOUT YOUR RESPONSIBILITY AND YOUR FAILURE TO INFORM YOUR SHAREHOLDERS COULD CONSTITUTE A FUNDAMENTAL VIOLATION OF SECURITY LAWS. I'LL GIVE YOU DOCUMENTATION, MR. CHAIRMAN, THAT MR. LEWIS TRIED TO DEFLECT THE MATTER TO THE FED BY ASKING FOR A LETTER THAT THEY MADE HIM DO IT. NOW, I'M GOING TO ASK YOU, MR. LEWIS, OUR INVESTIGATION FINDS THAT MR. BERNANKE BELIEVED THAT YOUR THOUGHT TO INVOKE A MAC WAS NOT CREDIBLE. TAKE A LOOK AT THE FOLLOWING E-MAIL FROM CHAIRMAN BERNANKE DATED DECEMBER 21st 2008, I THINK THE THREAT TO USE MAC AS A BARGAINING CHIP -- WE DON'T SEE IT AS A LIKELY SCENARIO AT ALL. YOU DID GET A SPECIFIC AMOUNT OF ASSISTANCE WHEN YOU DROPPED THE THREAT TO BACK OUT OF YOUR DEAL, ISN'T IT TRUE?
00:22:13	>>	YES, WE DID.
00:22:14	Kucinich, Dennis	TELL THE COMMITTEE HOUP.
00:22:15	>>	$20 BILLION.
00:22:17	Kucinich, Dennis	YOU GOT THE PROMISE OF 118 BILLION IN ASSET PROTECTION FOR A COMBINATION OF MERRILL AND BANK OF AMERICA TOXIC ASSETS.
00:22:27	>>	WE HADN'T SETTLED ON AN AMOUNT UNTIL SOMETIME -- THE WRAP WRAZ BEING CONSIDERED.
00:22:32	Kucinich, Dennis	THAT WAS IN ADDITION TO THE 15 BILLION OF T.A.R.P. MONEYS YOU RECEIVED IN OCTOBER, 10 BILLION IN T.A.R.P. YOU RECEIVED UPON ACQUIRING MERRILL, IS THAT RIGHT?
00:22:43	>>	WE DIDN'T SIGN THE AGREEMENT ON THE WRAP.
00:22:45	Kucinich, Dennis	CONTRARY TO YOUR REPRESENTATIONS TO THE FED, YOU WERE CONCERNED PRIMARILY ABOUT THE LOSSES AT MERRILL LYNCH. MERRILL'S LOSSES WERE LESS THAN HALF OF THE PROBLEM YOU FACED. LOSSES ORNG ORNG NATURING AT BANK OF AMERICA ITSELF WERE LARGER. MR. LEWIS, PLEASE LOOK AT THE FOLLOWING E-MAIL DATED DECEMBER 18th, 2008, BETWEEN OFFICIALS AT THE NEW YORK FED. ONE REPORT FINDING ON THE BASIS ON THE TOTAL OF 13 BASIS POINTS DETEE YORATION OF THE COMBINED BANK OF AMERICA, MERRILL LYNCH ENTITY, 16 BASIS POINTS IS DUE TO BANK OF AMERICA. 14 BASIS POINTS DUE TO MERRILL LYNCH. THE OTHER OFFICIALS DESCRIBED THIS AS A SMOKING GUN. ISN'T IT TRUE, MORE THAN HALF OF THE DECLINE IN YOUR ALL IMPORTANT WAS NOT CAUSED BY MERRILL LYNCH?
00:23:45	>>	YOUR APPLES AND ORANGES. THE SECURITIES --
00:23:48	Kucinich, Dennis	MAYBE ROTTEN APPLES AND ROTTEN APPLES. ISN'T IT TRUE YOU WERE TOLD IF YOU WENT THROUGH WITH THE MAC AND LATER NEEDED FINANCIAL ASSISTANCE FROM THE GOVERNMENT YOU WOULDN'T GET IT, ISN'T IT TRUE?
00:24:00	>>	REPEAT THAT, PLEASE.
00:24:02	Kucinich, Dennis	IN ATHAT IF YOU WENT THROUGH THE MAC AND LATER NEEDED FINANCIAL ASSISTANCE FROM THE GOVERNMENT, WRNLTS YOU TOLD YOU WOULDN'T GET IT?
00:24:14	>>	I THINK I SEEN IT IN. AN E-MAIL.
00:24:17	Kucinich, Dennis	GIVE THE PRECARIOUS AMOUNT OF YOUR BALANCE SHEET YOU BELIEVED AT THE TIME YOU COULD REASONABLY COULD NEED FINANCIAL ASSISTANCE FROM THE GOVERNMENT IN THE FUTURE?
00:24:26	>>	THE PREFERRED STOCK DOES NOTHING TO HELP THE TANGIBLE COMMON EQUITY RATIO.
00:24:37	Kucinich, Dennis	YOU WOULDN'T THINK ABOUT IT. IF YOU GOT $15 BILLION ON OCTOBER AND YOU'RE GOING TO COME BACK TWO MONTHS LATER AND ASK FOR ANOTHER $20 BILLION. 15 AND THEN 20 BILLION, DOES IT IT SHOW -- DOESN'T THAT SHOW THAT IT REALLY INCREASED YOUR TIER ONE CAPITAL RATIO, DOESN'T IT SHOW THAT?
00:24:59	>>	NOT TANGIBLE.
00:25:00	Kucinich, Dennis	TIER ONE.
00:25:02	>>	TIER ONE, YES.
00:25:03	Kucinich, Dennis	NOW, MR. LEWIS, THE GOVERNMENT BELIEVED THAT YOU KNEW OR SHOULD HAVE KNOWN ABOUT THE MERRILL LOSSES LONG BEFORE YOU SAID YOU DID BASED ON DATA THAT BANK OF AMERICA POSSESSED AND RENALLY REREASONABLEY REVIEW REVIEWED. THE GOVERNMENT DIDN'T BELIEVE YOU BUT THOUGHT THAT MERRILL LOSSES WERE LESS SIGNIFICANT THAN THE LOSSES THAT BANK OF AMERICA WAS EXPERIENCING AS A STAND ALONE ENTITY. THE GOVERNMENT EVEN THOUGHT YOU WERE MAKING THE THREAT TO USE MAC AS A BARGAINING CHIP. THE GOVERNMENT HAD GIVEN YOU 25 BILLION BEFORE YOU APPROACHED IT ABOUT MERRILL LYNCH. IF THE GOVERNMENT BELIEVED ALL OF THAT ABOUT YOU AND YOUR MANAGEMENT TEAM, WERE YOU SURPRISED THAT THE FED ARRANGED FOR YOU TO RECEIVE CONSIDER BL ADDITIONAL FINANCIAL SUPPORT IN JANUARY, DOES THAT SURPRISE YOU?
00:25:55	>>	WE RECEIVED 15 BILLION, NOT 25 BILLION FROM THE ORIGINAL T.A.R.P. PACKAGE. IT DID NOT SURPRISE ME THEY WERE WILLING TO GIVE US MORE. WE TALKED ABOUT COMING TO A SOLUTION TO GET THE MERRILL LYNCH DEAL DONE.
00:26:09	Kucinich, Dennis	THERE WAS A FINANCIAL CRISIS AND THEY THOUGHT IT WAS NECESSARY -- UNANIMOUS CONSENT FOR TWO MORE MINUTES.
00:26:17	>>	WITHOUT OBJECTION.
00:26:19	Kucinich, Dennis	THERE WAS A FINANCIAL CRISIS AND THEY THOUGHT IT WAS NECESSARY FOR THE SYSTEM, FOR THE DEAL TO GO THROUGH. IF THERE'S ONE THING ABOUT YOUR RECORD THAT'S CLEAR, YOU HAVE EXPERIENCED NEGOTIATING DEALS. WHAT DO YOU BELIEVE YOUR LEVERAGE WITH THE GOVERNMENT WAS AT THE END OF 2008?
00:26:42	>>	THE ONLY LEVERAGE I WOULD SAY WE HAD WAS THAT TWO HONORABLE PEOPLE HAD GIVEN ME THEIR WORD THEY WOULD TRY THEIR BEST TO FIND A SOLUTION.
00:26:47	Kucinich, Dennis	ISN'T IT TRUE IT WAS BECAUSE BANK OF AMERICA WAS A BIG BANK. IF YOU HADN'T BEEN A CEO, BEEN THE TOP EXECUTIVE AT THE MID SIZED OR SMALL REGIONAL BANK AND ACQUIRED A SIMILAR SIZE BANK, DO YOU THINK THE FEDERAL REGULATOR WOULD HAVE BEHAVED IN THE SAME WAY?
00:27:06	>>	I DON'T THINK I HAVE A FAVORITE SON FROM THE E-MAILS YOU JUST READ.
00:27:11	Kucinich, Dennis	IF YOU WERE A SMALLER INSTITUTION BEEN TAKEN OVER AND LIQUID ATED?
00:27:17	>>	I CAN'T SPECULATE ON THAT, SIR.
00:27:20	Kucinich, Dennis	WE HAVE A LARGE FINANCIAL INSTITUTION THAT DOESN'T FACE THE SAME CONSEQUENCES FOR MANAGEMENT OF SMALL ONES AND THE FED HAD AN OPINION THERE WAS CONSIDERABLE EVIDENCE OF MISMANAGEMENT. THERE'S BEEN A MISCONCEPTION HERE THAT THE GOVERNMENT PUT A GUN TO THE HEAD OF BANK OF AMERICA WHEN IT'S QUITE POSSIBLE IT WAS THE BANK OF AMERICA THAT PUT A GUN TO THE HEAD OF THE FED BY THREATENING TO INVOKE THE MAC AND I THINK THAT THIS WHOLE IDEA, MR. CHAIRMAN, ABOUT MR. LEWIS SOMEHOW BEING A VICTIM HERE, FLIES IN THE FACE OF THE FACT THAT YOU WERE CEO OF THE LARGEST BANK AND THAT YOU ARE PRETENDING THAT YOU DIDN'T ASK FOR HELP FROM THE GOVERNMENT TO TAKE THE BURDEN OFF YOUR BACK, THAT YOU DIDN'T ASK FOR A LETTER. YOU'RE GOING TO HAVE TO EXCUSE ME. THIS IS NOT CREDIBLE, YOU'RE TRYING TO CHANGE THE SCENARIO TO YOU AS A VICTIM TO YOU AS A POWERFUL CEO THAT MADE A DECISION THAT DENIED YOUR STOCKHOLDERS, YOUR SHAREHOLDERS, MATERIAL INFORMATION THAT THEY NEEDED PROVIDER TO A VOTE ON A MERGER. AND I THINK THAT IS THE CENTRAL POINT OF THIS HEARING AND I'M SORRY, THAT YOU HAVEN'T BEEN FORTHCOMING ENOUGH ABOUT THAT CENTRAL POINT. YIELD BACK.
00:28:34	>>	WELL, ONE THING FOR SURE, THERE WAS A SHOTGUN MARRIAGE, SHOTGUN WEDDING, NO QUESTION ABOUT THAT. LET ME SORT OF RAISE THIS ISSUE. ON DECEMBER THE 22nd, 2008, MR. LEWIS YOU SENT AN E-MAIL TO YOUR BOARD AND LET ME QUOTE, IT SAYS, I JUST TALKED WITH HANK PAULSON. HE SAID THAT THERE WAS NO WAY THE FEDERAL RESERVE AND THE TREASURY COULD SEND US A LETTER OF ANY SUBSTANCE WITHOUT PUBLIC DISCLOSURE, WHICH OF COURSE WE DO NOT WANT. DO YOU REMEMBER THAT?
00:29:21	>>	I DO, YES, SIR.
00:29:23	>>	YOU KNOW, THAT SORT OF -- I WAS RAISING THIS BECAUSE OF THE ANSWER THAT YOU GAVE TO MY COLLEAGUE FROM VIRGINIA, MR. CONNOLLY, I DIDN'T GET THAT POINT, THAT YOU ACTUALLY SENT THAT MEMO. I MEAN, IT SEEMED TO ME THAT IN HIS QUESTION THAT DIDN'T COME OUT.
00:29:40	>>	SURE.
00:29:43	>>	I HAD CALLED MR. BERNANKE AND SAID IS THERE SOMETHING YOU CAN GIVE US IN WRITING BECAUSE MY BOARD IS CONCERNED THAT EVERYTHING IS VERBAL AND WE HAVE NOTHING CONCRETE AND GOING IN TOWARDS THE END OF THE YEAR AND ABOUT TO HAVE TO CONSUMMATE THIS DEAL WITHOUT ANYTHING IN WRITING. HE SAID LET ME THINK ABOUT IT. AND THE NEXT CALL I GOT WAS FROM HANK PAULSON. AND HE TOLD ME THAT FIRST OF ALL, IF THEY GAVE US ANY KIND OF AGREEMENT IT WOULD BE SO WATERED DOWN THAT THE BOARD WOULD NOT FIND IT SATISFACTORY AND SECONDLY THAT THEY DID NOT WANT DISCLOSURE. HE WAS TALKING ABOUT THE GOVERNMENT NOT WANTING TO CREATE A DISCLOSEABLE EVENT AND HAVE TO DISCLOSE, NOT BANK OF AMERICA.
00:30:34	>>	SURE DIDN'T MAKE THAT CLEAR WITH MY COLLEAGUE FROM VIRGINIA. LET ME MOVE ON.
00:30:41	>>	I APOLOGIZE.
00:30:44	>>	CONGRESSWOMAN FROM OHIO.
00:30:46	Kaptur, Marcia "Marcy"	MR. LEWIS, I'VE BEEN HERE SINCE THIS MORNING AND FIND YOUR TESTIMONY A BIT DISQUIETING TODAY FOR SOME OF THE FOLLOWING REASONS. BANK OF AMERICA OWNS 49.9% OF BLACK ROCK. BUT YOU SEEM NOT TO KNOW ANYTHING OF ITS ACTIVITIES. NUMBER TWO, YOU ARE THE PERSON WHO WAS IN CHARGE WHEN BANK OF AMERICA ACQUIRED COUNTRYWIDE OVER A YEAR AGO, BUT YOU APPARENTLY WEREN'T AWARE OF ITS BOOKS AND THE LOSSES INHER ENT IN THE PURCHASE. NUMBER THREE, YOU ARE THE CEO OF THE LARGEST BANK IN THE COUNTRY AND YOU SEEM TO PRESENT YOURSELF AS HAVING A RATHER HANDS OFF RELATIONSHIP WITH THE FEDERAL RESERVE AND THE TREASURY. I FIND THAT SOMEWHAT INCREDULOUS. LET ME ASK SOME FOLLOW-UP QUESTIONS. IN TERMS OF THE PURCHASE OF BLACK ROCK THAT WAS A PART OF YOUR MERRILL LYNCH MERGER, IT'S MY UNDERSTANDING THAT BLACK ROCK NOW VALUED OVER $1.3 TRILLION. AND THAT THEY'VE JUST RECEIVED 5 NO-BID CONTRACTS FROM THE FEDERAL RESERVE, AMONG THEM MANAGING TROUBLED SUBPRIME MORTGAGES IN THE FREDDIE MAC AND FANNIE MAE PORTFOLIOS. THE PEOPLE OF THE UNITED STATES HAVE THROUGH THE FED HAVE PROPPED UP FANNY AND FREDDIE TO THE TUNE OF $200 BILLION. FOR THE RECORD, CAN YOU PROVIDE THE CONTRACT THAT BLACK ROCK HAS WITH THE FED, PARTICULARLY THE ONE REGARDING THE MANAGEMENT OF FANNIE MAE AND FREDDIE MAC'S PORT FORT YOES?
00:32:41	>>	I DON'T KNOW IF I CAN. WE DON'T RUN BLACK ROCK. WE HAVE TWO OR THREE SEATS ON THE BOARD, BUT DON'T HAVE A CEO OR CHAIRMAN AND HE DOESN'T REPORT TO ANYONE IN BANK OF AMERICA --
00:32:55	Kaptur, Marcia "Marcy"	YOU OWN 49.9%. ISN'T THAT A STRANGE RELATIONSHIP.
00:32:58	>>	WE DON'T OWN 51%. THAT WOULD BE THE DIFFERENCE.
00:33:02	Kaptur, Marcia "Marcy"	DO YOU KNOW HOW MUCH BLACK ROCK WILL EARN FROM THAT CONTRACT WITH THE FEDERAL RESERVE TO MANAGE FANNIE AND FREDDIE PAPERS.
00:33:13	>>	NO, I DON'T.
00:33:18	Kaptur, Marcia "Marcy"	LET ME MENTION, "NEW YORK TIMES" WROTE THE FOLLOWING, CAN A COMPANY BEING PAID TO SELL TROUBLED ASSETS FOR THE SAME KIND OF ASSETS FOR PRIVATE CLIENTS WITHOUT SHOWING PREFERENCE AND SHOULD THE GOVERNMENT SEEK COUNSEL FROM A COMPANY THAT STAND TO MAKE OR LOSE BILLION FZ THE POLICIES ARE ENACTED. CAN YOU OUTLINE HOW THE BANK OF AMERICA WILL AVOID CONFLICT OF INTEREST IN THE MORTGAGE PORTFOLIOS AND INSIDER DEALING CHARGES AS MORTGAGE PORTFOLIOS ARE RESOLVED AND BANK OF AMERICA MORTGAGES ARE INVOLVED WHEN BLACK ROCK IS ACTUALLY THE DES IG KNEE TO MANAGE THE PORTFOLIOS ON BY HALF OF THE FEDERAL RESERVE.
00:34:01	>>	BLACK ROCK WOULD HAVE TO MANAGE THOSE WITH THE CLIENT WOULD HAVE TO MANAGE ANYTHING LIKE THAT.
00:34:08	Kaptur, Marcia "Marcy"	BUT OBVIOUSLY, BANK OF AMERICA, SOME OF YOUR MORTGAGES ARE HELD BY FANNIE MAE AND FREDDIE MAC, YOU WERE ACQUIRER OF COUNTRY WD, THE LARGEST SUBPRIME ABUSER IN THE COUNTRY.
00:34:21	>>	AND BLACK ROCK WOULD HAVE TO TAKE THAT INTO ACCOUNT, YES.
00:34:24	Kaptur, Marcia "Marcy"	CAN YOU PROVIDE FOR THE RECORD THE DOCUMENTS YOU MAY HAVE AT BANK OF AMERICA THAT CONTAIN OR RECORD THE CONFLICT OF INTEREST REVIEW UNDERTAKEN BY BANK OF AMERICA TO ENSURE PROPER ETHIC AS THESE MORTGAGES ARE RESOLVED.
00:34:42	>>	THE CONFLICT WOULD BE WITH BLACK ROCK AND THE CLIENT, WHICH WOULD BE FREDDIE OR FANNIE MAE. COUNTRYWIDE IS DOING QUITE WELL AND WE HAVE CHANGED POLICIES TO BECOME ONE OF THE MOST REPUTABLE IN THE COUNTRY.
00:35:02	Kaptur, Marcia "Marcy"	THERE'S A WHOLE HEARING ON COUNTRYWIDE.
00:35:04	>>	IT WOULD BE PREBANK OF AMERICA.
00:35:06	Kaptur, Marcia "Marcy"	ARE ANY OF THE FORMER COUNTRYWIDE STAFF ON YOUR STAFF OF BANK OF AMERICA?
00:35:11	>>	THERE'S SOME STUFF BUT NOBODY IN EXECUTIVE MANAGEMENT.
00:35:17	Kaptur, Marcia "Marcy"	I BEG YOUR PARDON?
00:35:22	>>	WE SENT OUR CEO TO RUN THE COMPANY.
00:35:26	Kaptur, Marcia "Marcy"	MR. CHAIRMAN IT WOULDN'T BE BAD TO HOLD A HEARING ON THE RELATIONSHIP, BLACK ROCK THE COUNTRYWIDE AND FANNIE MAE AND FREDDIE MAC AND EXPLORE THE INTERLOCKING RELATIONSHIPS THAT YOU CLAIM HAVE NO BEARING ON ACTIVITIES WITHIN YOUR INSTITUTION WHICH SOUND VERY UNUSUAL AS YOU STATE THEM BEFORE THE COMMITTEE TODAY. I WANTED TO JUST IN MY SECOND QUESTION HERE, RELATING TO SUPERIOR BANKS, WHICH HAD THE LARGEST SETTLEMENT IN AMERICAN HISTORY AT THE FDIC IN 2001, OVER $450 MILLION AS A RESULT OF THEIR SUBPRIME ACTIVITYIES IN CHICAGO AND BEYOND INCLUDING SERVICES BY MERRILL LYNCH, WHICH IS HOW YOU WOULD ACQUIRE THE SUPERIOR LOANS, TROUBLED LOANS. LET ME ASK YOU WHEN BANK OF AMERICA ACQUIRED THOSE LOANS, DID YOU AUDIT THEM PRIOR TO RESELLING THEM TO INVESTORS?
00:36:21	>>	I'M NOT SURE OF THAT TRANSACTION. I WOULD HAVE TO GET YOU SOMEBODY WHO WAS MORE FAMILIAR WITH THE TRANSACTION.
00:36:28	Kaptur, Marcia "Marcy"	EXPLAIN TO US AS HEAD OF THIS MASSIVE AND IMPORTANT BANK IN OUR COUNTRY, WHAT IS YOUR PLAN FOR DEALING WITH BAD LOANS SUCH AS THE SUPERIOR LOANS THAT CAME TO YOU THROUGH THE FDIC MERRILL ACQUISITION?
00:36:40	>>	WELL TO THE EXTENT THAT YOU HAVE LOANS, YOU CAN REHABILITATE, YOU DO. TO THE EXTENT THAT YOU CAN SELL LOANS FOR DISCOUNTS, YOU DO. TO THE EXTENT YOU CAN'T DO EITHER, HOLD THEM ON THE BOOKS AND AT SOME POINT WRITE THEM OFF.
00:36:56	Kaptur, Marcia "Marcy"	IF YOU SELL THEM TO KNOWING INVESTORS ENTHEY WERE BAD LOANS, WHAT HAPPENS?
00:36:59	>>	YOU WOULD TAKE A MASSIVE DISCOUNT. THE BANK SELLING THEM WOULD TAKE A MASSIVE DISCOUNT.
00:37:06	Kaptur, Marcia "Marcy"	I WOULD LIKE THE PAPER TRAIL, AUDIT TRAIL ON THE SUPERIOR LOANS THAT YOUR BANK HAS BEEN HANDLING.
00:37:13	Kaptur, Marcia "Marcy"	THANK YOU, MR. CHAIRMAN.
00:37:15	Kaptur, Marcia "Marcy"	MR. CHAIRMAN -- MAY I ASK THE CHAIRMAN TO YIELD JUST FOR A SECOND -- MAY I PLACE IN THE RECORD AN ARTICLE FROM THE ATLANTIC MONTHLY, MAY 2009 ON THE FINANCIAL CRISIS, PLEASE?
00:37:26	>>	WITHOUT ACTION.
00:37:28	Kucinich, Dennis	ASK UNANIMOUS CONSENT TO INSERT E-MAILS I OFFERED ON THE SCREEN FOR THE RECORD.
00:37:33	>>	WITHOUT OBJECTION.
00:37:34	>>	THE GENTLEMAN FROM MARYLAND.
00:37:36	Cummings, Elijah	THANK YOU VERY MUCH, MR. CHAIRMAN AND MR. LEWIS, I'M CONFUSED. JUST PICKING UP ON SOME OF THE THINGS THAT THE CHAIRMAN AND MR. KUCINICH WERE ASKING ABOUT. I CAN KIND OF UNDERSTAND YOUR REACTION TO DISCOVERING THERE WAS A $12 BILLION LOSS SUFFERED BY MERRILL LYNCH ESPECIALLY COMING AFTER SHAREHOLDERS VOTE TO PURCHASE MERRILL LYNCH. I CAN UNDERSTAND YOU TELLING THE FED AND SECRETARY PAULSON YOU WERE THINKING OF BACKING OUT OF OF THE DEAL. I CAN UNDERSTAND THAT. THAT WAS BASED UPON YOUR EXPERTISE AND YOUR EXPERIENCE. I CANNOT UNDERSTAND THE AGREEMENT YOU REPORTED THAT YOU MADE WITH TREASURY AND THE FED WHICH THEY BOTH DENIED TO DISCLOSE THE $12 BILLION LOSS. IF THE LOSS MADE THIS HORRIBLE BUSINESS DEAL TO ACQUIRE MERRILL LYNCH, WHY DID YOU STILL DO IT? AND I KNOW YOU'VE TOLD US OVER AND OVER AGAIN. BUT LET'S BE FRANK. I MEAN, AND I'M WONDERING, HOW DO YOU DETERMINE WHAT IS -- YOU MUST DISCLOSE. WE HAVE SHAREHOLDERS HERE WHO ARE CONCERNED. YOU'RE ABOUT TO GO INTO A DEAL WITH A COMPANY THAT IS WORSE OFF THAN IS MADE TO BELIEVE. AND IT JUST SEEMS TO ME THAT AND A PERSON WITH YOUR EXPERIENCE, THERE ARE A LOT OF PEOPLE IN THIS SITUATION AND I DON'T CARE WHAT PAULSON MAY HAVE SAID, WHAT BERNANKE MAY HAVE SAID. THEY WOULD HAVE SAID, THE TELL WITH YOU, I'M GOING TO STAND ON PRINCIPLE AND MY PRINCIPLES TELL ME THERE'S A MAC HERE AND A REAL PROBLEM. IF I GO DOWN, I GO DOWN. BUT I'M GOING DOWN ON PRINCIPLE. I WANT TO GIVE YOU AN OPPORTUNITY TO TELL US, BECAUSE I GOT TO TELL YOU, I MEAN, I'M KIND OF CONCERNED BECAUSE I THINK THERE ARE SOME SERIOUS CREDIBILITY ISSUES AND I THINK MR. KUCINICH RAISED SOME THINGS THAT IF I WERE YOUR LAWYERS, I WOULD BE CONCERNED ABOUT. SO HELP ME.
00:39:54	>>	YOUR REFERRING TO THE FACT THAT DESPITE THE FACT WE THOUGHT WE COULD HAVE A MAC WE RELIED ON THE --
00:40:03	Cummings, Elijah	AND I'M ALSO GOING TO THE POINT THAT I BELIEVE THAT WHEN YOU SAID YOU DON'T JUST GO AND TELL THE FEDS AND PAULSON THAT, LOOK, I SMELL A RAT HERE. SOMEBODY OF YOUR STATURE, I CAN UNDERSTAND IF YOU WERE SOME GUY THAT CAME OFF THE STREET SIX MONTHS AGO AND THE LAST THING YOU DID WAS EVEN THOUGH YOU WERE A BANK TELLER, NO OFFENSE TO BANK TELLERS, THAT'S ALL YOU DID, YOU'RE A MAJOR PLAYER. AND WHEN YOU SPEAK, PEOPLE LISTEN. SO I'M TRYING TO FIGURE OUT, YOU'VE GOT -- YOU -- I MEAN, YOU SAID THERE IS A PROBLEM HERE. BUT THEN YOU LET THESE FOLKS -- I MEAN IN ALL DUE RESPECT TO BERNANKE AND THE FEDS AND ALL DUE RESPECT TO PAULSON, YOU'RE THE HEAD OF THIS BANK AND HEAD OF BANK OF AMERICA, THEY ARE NOT. YOU'RE -- YOU'VE GOT TO ANSWER TO THE SHAREHOLDERS. I'M TRYING TO FIGURE OUT WHY -- AND THIS IS STUFF, IT SEEMS TO ME, IF I HAD THIS KIND OF INFORMATION, I WOULDN'T EVEN WANT MY SHAREHOLDERS TO BE VOTING ON SOMETHING AND THEY DID NOT HAVE FULL DISCLOSURE. I'M TRYING TO FIGURE OUT WHERE DOES THE DISCLOSURE COME IN. I GET THE IMPRESSION THAT THERE WAS INSUFFICIENT DUE DILIGENCE, I KNOW YOU WERE DEALING WITH A CRUNCH TIME AND ONLY A MATTER OF HOURSZ IRP YOU WERE TRYING TO TURN ALL OF THIS OVER. I GOT THAT. I MAN OF YOUR STATURE I REFUSE TO BELIEVE YOU SET TRAPS PARNSNS SPARNSCY TO THE SIDE FOR XPEED YENCY. I'M TRYING TO GIVE YOU AP OPPORTUNITY TO EXPLAIN THIS TO US. IF YOU DON'T WANT US, THAT'S UP TO YOU.
00:42:04	>>	IF Y ASASK, I WILL DO MY ST. I I DON'KNOWOWHAHAT ELSE I CAN S S OTHER THAN WE WEE INFLUENCED BY THE STRONG NATURE OF THE W WORDING OMOM THE FEDERAL RESERVE AND THE TREASURY IN THE SENSE THAT THEY OBVIOUSLY FELT VERY STRONGLY THAT WE DID NOT HAVE A MAC. I ALSO LOOKED -- STILL THOUGHT WE HAD A STRATEGIC REASON TO DO MERRILL LYNCH DESPITE THE FACT IT HAD A FINANCIAL ISSUE. AND THE THIRD I THOUGHT THE DOWNSIDE OF CALLING A MAC AND NOT WINNING WAS SEVERE. ALL OF THOSE FACTORS WERE FACTORS IN ME MAKING THAT DECISION. IF I HAD THOUGHT THAT IT WAS A MAC I WOULD HAVE CALLED A MAC.
00:43:03	Cummings, Elijah	I SEE MY TIME IS UP, MR. CHAIRMAN.
00:43:04	>>	THANK YOU, GENTLEMAN FROM MARYLAND. AS WE COME TO THE CONCLUSION OF THIS HEARING. IT'S IMPORTANT TO REMEMBER THAT WE HAVE HEARD ONLY ONE SIDE OF THE STORY TODAY. THE COMMITTEE NEEDS TO HEAR FROM MR. PAULSON AND MR. BERNANKE BEFORE WE DRAW ANY HARD AND FAST CONCLUSIONS. I DO BELIEVE IN FAIRNESS. HOWEVER, I DO THINK IT IS FAIR TO OBSERVE THAT A FLAWED FINANCIAL REGULATORY PROCESS WAS AT WORK IN THIS CASE. WE SEE CLOSED DOORS, MEETINGS, CODED MESSAGES. MOTIVES QUESTIONS AND PRIVATE E-MAILS. BASICALLY THE REGULATORS AND THE FINANCIAL INSTITUTIONS SEEMS TO BE MAKING UP THE RULES AS THEY WENT ALONG. AS CONGRESS CONSIDERS FINANCIAL REGULATORY REFORM, ONE OF THE LESSONS FROM THIS CASE IS THAT WE NEED MUCH MORE TRANSPARENCY AND ACCOUNTABILITY IN THE FINANCIAL REGULATORY AND OVERSIGHT PROCESS. THE AMERICAN TAXPAYERS AND CORPORATE SHAREHOLDERS DESERVE NO LESS. THEY NEED TO KNOW WHAT'S GOING ON. LET ME AGAIN, THANK YOU MR. LEWIS, FOR BEING HERE TODAY. BEFORE WE ADDS ADJOURN LET ME STAY, THIS COMMITTEE HAS AND WILL CONTINUE TO PROTECT THE AMERICAN TAXPAYERS. AND WE'LL CONTINUE TO MAKE SURE THAT THE TAXPAYERS DOLLARS ARE SPENT IN A TRANSPARENT AND WISE MANNER. WITHOUT OBJECTIONS, I ENTER THIS BINDER INTO THE COMMITTEE RECORDS AND WITHOUT OBJECTION, THE COMMITTEE STANDS ADJOURNED.