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Paulson says he pressured Bank of America CEO
By ANNE FLAHERTY, AP

Former Treasury Secretary Henry Paulson says he pressured Bank of America last year to go through with its plans to buy Merrill Lynch but didn't tell the bank's chief to hide losses from shareholders.
In testimony Thursday before the House Oversight and Government Reform Committee, Paulson said he told Bank of America Corp. CEO Kenneth Lewis that the Federal Reserve could fire him if he backed out on the deal.
Paulson said that had the deal collapsed, it would have hurt the bank's stockholders as well as the broader financial system. The government ultimately gave $20 billion to the bank to blunt losses tied to the acquisition.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — A lawmaker is accusing Bank of America's chief executive of manipulating the government into paying $20 billion so the bank could buy troubled Merrill Lynch.
The deal is drawing scrutiny at a hearing Thursday of the House Oversight and Government Reform Committee.
The committee chairman, New York Democrat Edolphus Towns, says bank CEO Kenneth Lewis was able to demand the money because the Bush administration was desperate for the deal to go through.
Towns said at the hearing that Lewis got "everything he wanted."
The deal did go through. The bank ultimately accepted $45 billion in federal aid — including $20 billion to absorb the financial hit it took from acquiring Merrill Lynch.
Former Treasury Secretary Henry Paulson says he was justified in pressuring Lewis because dropping the deal would have devastated the economy.

2009-07-16 11:02:14