Over four years ago, the federal government forced Bank of America to acquire Merrill Lynch. Last week, Bank of America signaled it will dissolve Merrill Lynch.
In 2009, Bank of America chief Kenneth Lewis testified that the federal government threatened to strip Bank of America board members if the bank reneged on acquiring Merrill Lynch. “What gave me concern is that they gave that threat to a bank in good standing,” said Lewis.
Emails between bank employees revealed that Federal Reserve Chairman Ben Bernanke warned that “management is gone” if Bank of America failed to go through with the deal and needed future financial assistance.
Bank of America went along with the Merrill Lynch deal and received $45 billion from TARP.
Now, according to an August 2nd filing, Bank of America plans to dissolve the subsidiary while keeping the Merrill Lynch brand for its retail brokerage and investment bank.
As Bloomberg News reports, “Bank of America faced regulatory probes, investor lawsuits and criticism from lawmakers over claims it didn’t warn shareholders about Merrill Lynch’s mounting losses before they voted to buy the firm for $18.5 billion. Last year, Bank of America agreed to pay $2.43 billion to investors who suffered losses during the takeover.”