The Silencing of Ken Lewis

Who was calling the shots at Bank of America during the height of the financial crisis? The Wall Street Journal reports “Federal Reserve Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America Corp. to not discuss its increasingly troubled plan to buy Merrill Lynch & Co—a deal that later triggered a government bailout of BofA—according to testimony by Kenneth Lewis, the bank's chief executive.” Lewis was questioned by New York State Attorney General Andrew Cuomo in February, and the transcript has been released now for the first time. “I was instructed that 'We do not want a public disclosure,’” Lewis says. Why might this be a problem? “Under normal circumstances, banks must alert their shareholders of any materially significant financial hits. ... Disclosing losses at Merrill—which eventually totaled $15.84 billion for the fourth quarter—could have given BofA's shareholders an opportunity to stop the deal and let Merrill collapse instead.”