New York State Attorney General Andrew Cuomo charged Bank of America, its former CEO, Ken Lewis, and former CFO, Joseph Price, with fraud, according to a
February 4 statement from Cuomo’s office. “
Bank of America Management Manipulated Federal Government into Granting Massive Taxpayer Bailout," the statement said. The bank merged with Merrill Lynch in late 2008, during the most acute phase of the financial crisis so far.
Though the charges center around the merger, the question must be asked: what would have happened to the financial system if the merger had not taken place?
The announcement said: “Bank of America’s management intentionally failed to disclose massive losses at Merrill so that shareholders would vote to approve the merger. Once the deal was approved, Bank of America’s management manipulated the federal government into saving the deal with billions in taxpayer funds by falsely claiming that they would back out of the deal without bailout funds.”
The Attorney General’s office worked with the office of Special Inspector General for the Troubled Asset Relief Program Neil Barofsky on the investigation. “The events surrounding the Bank of America/Merrill Lynch merger and the United States Government’s investment in Bank of America through the Troubled Asset Relief Program are an important part of the history of the financial crisis,” Barofsky said in the statement. “Attorney General Cuomo and his staff, working hand in hand with the law enforcement agents of SIGTARP, quickly identified the important shareholder and taxpayer interests at stake in the disclosures surrounding the merger and meticulously pieced together the evidence that supports the historic charges filed today.
“Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large. This was an arrogant scheme hatched by the bank’s top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America’s misdeeds,” Cuomo said in the announcement.
Read the entire complaint, here.
Comments? Please send them to kmcbride@wealthmanagerweb.com. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.