Page 656 - untitled

Notes to Chapter 20 627

181. Ken Lewis, deposition In Re: Executive Compensation Investigation: Bank of America–Merrill
Lynch, February 26, 2009, p. 9, available from House Committee on Oversight and Government Reform
and the Subcommittee on Domestic Policy, Bank of America and Merrill Lynch: How Did A Private Deal
Turn into a Federal Bailout? 111th Cong., 1st sess., June 11, 2009.
182. Bank of America, 4Q 2008 Earnings Call transcript, January 16, 2009, p. 16.
183. Ibid., pp. 3, 10, 16.
184. John Thain, interview by FCIC, September 17, 2009.
185. Complaint, SEC v. Bank of America (S.D.N.Y. Jan. 12, 2010); Final Consent Judgment As to De-
fendant Bank of America (S.D.N.Y. Feb. 4, 2010).
186. Ken Lewis, interview by FCIC, October 22, 2010.
187. Lewis, deposition In Re: Executive Compensation Investigation: Bank of America—Merrill Lynch,
pp. 34, 38; Henry Paulson, written testimony before the House Committee on Oversight and Govern-
ment Reform and the Subcommittee on Domestic Policy, Bank of America and Merrill Lynch: How Did a
Private Deal Turn into a Federal Bailout? Part III, 111th Cong., 1st sess., July 16, 2009, p. 22.
188. Paulson, written testimony before the House Oversight Committee, July 16, 2009, p. 23 (quota-
tion); Ben Bernanke, written testimony before the House Committee on Oversight and Government Re-
form and the Subcommittee on Domestic Policy, Bank of America and Merrill Lynch: How Did a Private
Deal Turn into a Federal Bailout? Part II, 111th Cong., 1st sess., June 25, 2009, p. 18.
189. Lewis, interview.
190. Thain, interview
191. Paulson, written testimony before the House Oversight Committee, July 16, 2009, pp. 19, 25.
192. Chairman Ben Bernanke, email to General Counsel Scott Alvarez, “Re: Fw: BAC,” December 23,
2008, available from House Oversight Committee, Bank of America and Merrill Lynch: How Did a Private
Deal Turn into a Federal Bailout? Part II, June 25, 2009, p. 73; Representative Edolphus Towns, in ibid.,
p. 2.
193. Lewis, interview.
194. Minutes of a Special Meeting of Board of Directors of Bank of America Corporation, December
22, 2008, available in House Committee on Oversight and Government Reform, June 11, 2009, p. 183.
195. Minutes of a Special Meeting of the Bank of America board, December 30, 2008, available in
ibid., p. 188.
196. Lewis, interview.
197. See Department of the Treasury, Office of Financial Stability, “Troubled Assets Relief Program:
Transactions Report, for Period Ending November 16, 2010,” November 18, 2010. In addition to drawing
on these funds, it was also a “substantial user” of the Fed’s various liquidity programs. The holding com-
pany and its subsidiaries had already borrowed $55 billion through the Term Auction Facility. It had also
borrowed $15 billion under the Fed’s Commercial Paper Funding Facility and $20 billion under the
FDIC’s debt guarantee program. And newly acquired Merrill Lynch had borrowed another $21 billion
from the Fed’s two Bear Stearns–era repo-support programs. Yet despite Bank of America’s recourse to
these programs, the regulators worried that it would experience liquidity problems if the fourth-quarter
earnings were weak.
198. The amount of FDIC-guaranteed debt that can be issued by each eligible entity, or its cap, is
based on the amount of senior unsecured debt outstanding as of September 30, 2008.
199. FRB and OCC staff, memorandum to Rick Cox, FDIC, subject: “Bank of America Corporation
(BAC) Funding Vulnerabilities and Implications for Other Financial Market Participants,” January 10,
2009, p. 2.
200. Sheila C. Bair, FDIC Chairman, written testimony before the House Committee on Oversight
and Government Reform and the Subcommittee on Domestic Policy, Bank of America and Merrill Lynch:
How Did a Private Deal Turn into a Federal Bailout? Part V, 110th Cong., 1st sess., December 11, 2009,
p. 2.
201. FRB and OCC staff memo to Rick Cox, “Bank of America Corporation (BAC) Funding Vulnera-
bilities,” pp. 2, 4; Mitchell Glassman, Sandra Thompson, Arthur Murton, and John Thomas, memoran-
dum to the FDIC Board of Directors, subject: Bank of America, etc., January 15, 2009, pp. 8, 9.
202. Bair, written testimony before the House Oversight Committee, December 11, 2009, p. 3.