Bank of America Emails Reveal Execs Concerned Over Merrill and Proper Use of English


It was Jan. 15, and the government was about to hand Bank of America its second taxpayer lifeline as the bank was drowning in losses from its recent marriage to Merrill Lynch.

Kenneth D. Lewis, the chairman of Bank of America, and other top executives convened a late-afternoon conference call to explain the bank’s latest problems to the board: Not only was the government making the new multibillion-dollar bailout on punishing financial terms, but Merrill’s losses — already thought to be steep — were also far worse than the bleak estimates tallied just weeks earlier.

As Mr. Lewis and the other executives continued their briefing, one board member minced no words in his assessment of the situation.

“Unfortunately it’s screw the shareholders!!” Charles K. Gifford wrote to a fellow director in an e-mail exchange that took place during the call.

“No trail,” Thomas May, that director, reminded him, an apparent reference to the inadvisability of leaving an e-mail thread of their conversation.

The e-mail messages, reviewed by The New York Times, were handed over to the House Committee on Oversight and Government Reform this week as Bank of America opened a collection of documents that it has kept secret about the ill-fated merger. While the e-mail does not show that the bank deliberately kept vital information on the deal from shareholders, it opens a window onto the concerns harbored by several board members over the Merrill deal.

Shortly after Mr. May’s remark about an e-mail trail, Mr. Gifford said his comments were made in “the context of a horrible economy!!! Will effect everyone.”

“Good comeback,” Mr. May replied.

Well no wonder Bank of America is fucked, its executives don't even know the difference between "effect" and "affect." And meanwhile these bastards loaded up on trillions in complex financial instruments? I bet Mr Gifford doesn't know the they're/their/there rule either. "It's there problem," he said when asked why the fuck BAC thought it was appropriate for taxpayers to shovel out billions to save their bitchasses after their bad bets went horribly awry.

Anyway, in case you've forgotten, e-mails have played a pivotal role in exposing the monkey business on the part of the Fed through all of this Bank of America drama, like these winners:

The e-mails reflect the understated nature of "Fedspeak." The Fed version of shouting "Fire!" would be to observe that "the ambient temperature seems to be rising in a measurable fashion." In a Dec. 18, 2008 e-mail, Tim Clark, a senior advisor in the Fed's Division of Banking Supervision and Regulation, warned that the financial conditions at Bank of America "have also deteriorated recently," and noted that "the firm is very thinly capitalized." Clark said that the decline at Bank of America "appears to be driving losses at ML even as they are portraying the losses at ML as being the problem here." So much for a "strong" Bank of America.

Merrill Lynch was also melting down, however. "Merrill is really scary and ugly," wrote Mac Alfriend, senior vice president of banking supervision and regulation at the Richmond Fed. Bank of America's headquarters in Charlotte, N.C. is in the Richmond Fed's district.

When a nervous Lewis suggested to regulators in December that Bank of America might invoke a "material adverse change" (MAC) clause to get out of the Merrill deal, regulators responded by warning him that such an action would have serious repercussions for Lewis, his bank, and the financial system. The Fed and Treasury threatened to remove Lewis and his board of directors if Bank of America backed out. "Fire BofA if you do it, irresp. for the country," said Bank of America chief financial officer Joe Price, in his notes on a conversation with Treasury Secretary Henry Paulson.

DBA Fedgate. See also:

Feb 2:
Bernanke and Paulson: Economic Terrorism at its Finest

Feb 20:
Bank of America: From Bad to Worse

April 23:
Did Bernaulson Violate Securities Law in BofA's Merrill Mess?
Mutiny Among Pirates: Paulson Throws Bernanke Under the Bus on Bank of America/Merrill Deal
Lewis: Bernaulson Made Me Do It

April 26:
Cuomo Hands Off BofA/Merrill... Case Has 1/3 of a Chance

June 9:
Federal Reserve Subpoenaed Over Bank of America/Merrill Deal

June 10:
Fed E-Mails Show Bank of America Bagged on by Bernanke, Fed Lawyers
The Enron Connection and a Peek Inside Actual Federal Reserve Inboxes. And?

June 11:
The Fed on Bank of America: "Ugly" Indeed, With the Email Chains to Prove It

June 24:
Bernanke, Issa, the King of the Goldman Rats, More BofA and OMG Not the Internet, Obama!
Surprise! The Fed Engaged in "Cover Up" on Bank of America/Merrill Deal Says New Issa Report

June 25:
Bernanke v Congress: Who the F&^k Has a Decoder Ring for *This* Bulls&$t?!
Mr Bernanke Goes to Washington: Defending the Fed, Bank of America Edition

July 1:
Regulator of Last Resort Hits a Snag: Fedgate Leads to New Questions, Uncertain Future for Fed Regulation

July 15:
Fedgate Continues! Paulson to Congress: Don't Look at Me

July 19:
Paulson's Fedgate Defense: I Did not Have Sexual Relations with those Toxic Assets

Holy shit this is a mess!

And BofA is actually playing nice, says

On Monday night, Bank of America agreed to hand over to the Securities and Exchange Commission and other government arms documents related to the legal advice BofA received in connection with its merger with Merrill Lynch last year. The SEC is investigating whether BofA executives knew about the massive losses at Merrill before it merged with the brokerage house and whether the bank misled investors by withholding that information.

The documents being released are protected under attorney-client privilege. The bank is releasing them "to put the matter behind us," BofA spokesman Larry DiRita told "Attorney-client privilege is a very important business principle, but in this instance, with pressure in multiple inquires for additional insight, we decided to waive it in this matter."

The agreement "indicates our desire to fully cooperate with all of the inquiries. We have nothing to hide. We made all the appropriate disclosures at the time of the Merrill transaction," said DiRita.

BofA is under three separate probes related to the Merrill merger: an SEC investigation; an inquiry by New York Attorney General Andrew Cuomo; and a review by a panel of the House Committee on Oversight and Government Reform, headed by New York Democrat Edolphus Towns. The bank informed both the Cuomo and the House panel that it was waiving its attorney-client privilege.

Props to "scary and ugly" again, that one never gets old.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.