Some of the emails that recently came to light — from prior to the Merrill acquisition closing — makes it pretty hard for the company to claim MAC — Material Adverse Condition. The email exchanges make clear it they had a pretty good idea about the lousy condition Merrill Lynch was in. To my read, it looks like they got cold feet once they realized they bid too much too soon.

I think Kenny has some ‘splainin to do!

“Congressional investigators think that reams of internal documents turned over by Bank of America last Friday show that its executives were alarmed by mounting losses at Merrill Lynch well before shareholders voted to approve the merger, according to sources familiar with the matter.

Investigators also think the documents, combined with prior testimony and fresh interviews with a key executive, suggest that Bank of America chief executive Kenneth D. Lewis used the threat of backing out of the government-backed deal as leverage for billions more in taxpayer bailout money, the sources said.”

The lawyers are not going to be happy about this one . . .

>
Source:
Documents raise skepticism on Hill about Bank of America
Tomoeh Murakami Tse
Washington Post October 21, 2009

http://www.washingtonpost.com/wp-dyn/content/article/2009/10/20/AR2009102004159.html

Category: Bailouts, Corporate Management, Legal, M&A

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Bank America Merrill Merger Emails: “Read and weep” “What a disaster!””

  1. bsneath says:

    There has got to be more to this than what has been made public. Something doesn’t add up. KL buys ML, the due diligence shows that it is a POS, he wants to back out, which is in the best interest of the company, he is told by Paulson & Bernanke under no such circumstances shall he back out because it is not in the best interests of the nation, and then he is vilified for doing what he was instructed by the government to do because it is not in the best interest of the company. What am I missing?

  2. call me ahab says:

    “he is told by Paulson & Bernanke under no such circumstances shall he back out because it is not in the best interests of the nation, and then he is vilified for doing what he was instructed by the government’

    good point

  3. Winston Munn says:

    @ bsneath,

    “What am I missing?”

    You’re supposed to rub the side of your nose and then they play that piano music.

  4. Vermont Trader says:

    everyone is just going to say that

    “at the time they believed, the threat of a massive collapse in the financial system was more of a threat to our shareholders survival than the risks of the merger. Even with the new loses we had to do our part to make sure it didn’t all fall apart.”

    what would have happened if they had let MER fail?

  5. scharfy says:

    OH MY GOD!! look there – a healthcare reform debate!!!!

    still here?

    just practicing Team Obama’s next move.

  6. Marcus Aurelius says:

    Vermont Trader Says:

    “what would have happened if they had let MER fail?”
    __________

    We still might learn the answer to that question, or worse. I don’t really believe things are under control, yet. What I take from the whole fiasco is that a bunch of bankers freaked out, panicked, and made crazy deals while simultaneously pumping borrowed money into the system. Not much of a confidence builder.

  7. DiggidyDan says:

    StrongArmed. . .

  8. That “The Stumblin’ Herd” was infected by ‘mad-cow disease’(bovine spongiform encephalopathy) was obvious from, broad, Pastures away, and way before the BAC-MER mash-up..

    ex. 1. Merrill Lynch’s Stan O’Neal will be well rewarded for his failure
    http://www.bloggingstocks.com/2007/10/29/merrill-lynchs-stan-oneal-will-be-well-rewarded-for-his-failur/

    further, these, continuing ‘events’ make, an even greater, mockery of previous white-washing, sold as ‘Reform’, like SarbOx.
    as one can see here http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=SarbOx+failure SarbOx was, merely, a jobs program for Business Consultants, IT Developers, and, more, useless Accountants/Auditors.

    good thing “Bag” Holder is ensconced in the AG chair..
    http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Eric+Holder+ex-Clinton+acting+AG+
    easier to bury the fresh bodies, when you know where the old ones are..

  9. hammerandtong2001 says:

    @ bsneath

    Exactly.

    The news report linked here tells us nothing, is misleading, and misses the core point.

    In fact, the article makes the point, unwittingly, that BOA was actually strong-armed by US Treasury into closing this disastrous merger. I.E. if the leadership at BOA was alarmed and highly concerned about mounting losses at Merrill, and a recent operating history demonstrating material operating weakness, and BOA’s Lewis started to push back from this combination in Nov and Dec, 2008 — then how did this deal get done?

    Simple: Paulson told Lewis to do it — or else.

    .

  10. Moss says:

    A microcosm of the broader hubris disease.
    He paid too much.
    I am sure GS had some exposure to ML.

  11. doug says:

    I don’t think HB&B really likes having competition from NC…..

  12. Pat G. says:

    “makes it pretty hard for the company to claim MAC “. They lied? Who knew?

  13. vachon says:

    I dunno. There’s more going on here than meets the eye. Either this investigation is taking way too long or members of the committee see this as a potential 2010 campaign boost if they play it right.