The headline said "Bank of America deal had White House support" without citing the source of that assertion. It should have attributed the information to internal Bank of America documents.
Bank of America deal had early White House support
Tuesday, October 20, 2009
Top economic advisers to President Obama signed off on a deal to protect Bank of America from losses incurred by its purchase of failed Wall Street firm Merrill Lynch a month before the new administration took office, according to Bank of America documents.
The documents, describing internal discussions at the bank in late 2008, assert that executives were told that incoming National Economic Council Director Lawrence H. Summers and incoming Treasury Secretary Timothy F. Geithner had endorsed the deal to provide new guarantees to Bank of America.
The acquisition has been a source of protracted debate since earlier this year, when questions arose about whether federal officials exerted an inappropriate amount of pressure on Bank of America to complete the deal. There's also been debate about whether the bank made appropriate disclosures to its shareholders about losses at Merrill Lynch, its negotiations with the government for additional support and compensation plans at Merrill Lynch.
These issues have been the subject of investigations by the House Oversight and Government Reform Committee, the Securities and Exchange Commission and New York's attorney general.
The documents, which were obtained by The Washington Post and are in the hands of committee investigators, are the clearest sign that top Obama officials agreed with the Bush administration and the Federal Reserve's approach.
Bank of America chief executive Kenneth D. Lewis told the company's board that Federal Reserve Chairman Ben Bernanke told him "that Geithner and, in addition, Larry Summers, were both on board with the transaction," according to Dec. 22 talking points prepared for a conference call.
A Dec. 29 e-mail from Joe Price, Bank of America's chief financial officer, to Lewis and others said he had talked to Federal Reserve Governor Kevin Warsh.
He indicated that "we had the strongest assurances" that Bernanke "will survive the administration change" and that then-Treasury secretary Henry M. Paulson Jr. and Geithner, his eventual replacement, "were all aware and in agreement with the representations made to Ken Lewis in the discussions."
Treasury spokesman Andrew Williams said: "After being named as Treasury secretary nominee, Geithner was recused from any issues involving individual banks, including Bank of America. It was perfectly natural and appropriate that the incoming Treasury secretary would be kept apprised of key developments but he was not making decisions for the Government."
White House spokesman Matthew A. Vogel said Monday that "Summers had occasional briefings by Federal Reserve officials during the transition but did not make, review or approve decisions regarding financial institutions during that time."