Paulson didn

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Paulson is testifying befor e the U.S. House Committee on Oversight andGovernmenft Reform. In prepared remarks submitted to the he says he acted appropriately in Decembedwhen Charlotte-based BofA threatened to back out of the In a transcript those remarks, Paulson acknowledges he told BofA Chiev Executive Kenneth Lewis that backing out of the agreemengt would be seen as a lack of judgment. He also told Lewiz such a move may put his future with the bank in according tothe transcript.
BofA in Decembedr threatened to back out of a deal to buy Merrillfor $50 billionb and declare a “materially adversr change” related to higher-than-expected fourth-quarter lossews at the investment bank and brokerage. Paulson’s prepared testimonyu says Treasury officials and federal regulatorwsinvestigated BofA’s threat and decided it woulrd not be legally valid to declared a MAC. Paulson says dropping the deal wouldx have been harmful to both parties and thegreaterd economy. “I believe my remarks to Mr. Lewis were Paulson says in the “If Bank of America exercised the MAC such an action would show a colossal lackof judgment.
“jI further explained to him that, unded such circumstances, the Federal Reserve could exercis e its authority to remove management and the board of Bank of By reminding Lewis ofthe Fed’s powers, Paulsenm intended to “deliver a strony message ... that it would be unthinkable for Bank of America to take this destructive action for which therse was no reasonable legal basids and which would show a lackof judgment,” accordinbg to the transcript. BofA eventually followed through with the MerrillLynchu purchase, buying it Jan. 1 for $29.1 billion.
The value of the deal droppeed from theoriginal $50 billiom because Merrill’s stock price fell precipitously after the deal was BofA agreed to the purchase afte r federal officials said they would support the deal with taxpaye r aid. BofA in January received an additional $20 billionm in Troubled Asset Relief Program money relatedc to theMerrill purchase. The bank has received a totap of $45 billion from the program.