Press Release

Cummings Questions Taxpayer Funding of Merrill Lynch Purchase

Cummings Questions Taxpayer Funding of Merrill Lynch Purchase

Congressman calls actions by Bank of America “old-fashioned stick-up”

(Washington, DC) – Congressman Elijah Cummings today investigated, along with other members of the Committee on Oversight and Government Reform, the need for a $20 billion dollar taxpayer-funded handout to Bank of America from TARP. The money was paid to Bank of America when they threatened to pull out of a planned merger with Merrill Lynch, despite a complete lack of legal ability to do so.

Bank of America threatened to invoke a “Material Adverse Condition (MAC),” which would have allowed them to back out of the deal. However, most legal advisers believed that invoking the MAC would’ve been legally nearly impossible.

“The MAC wasn’t a real threat,” said Cummings. “Merrill Lynch was not just an acquisition for Mr. [Bank of America CEO Ken] Lewis. It was a trophy. When the deal could be sweetened with government cash, what harm could they have thought there was in an empty threat like a MAC? It was heads, I win; tails, I win huge. While I already asked the SEC to investigate BOA for using taxpayer funds to settle its SEC case, I am equally concerned about what is before this committee. To me, it seems to be nothing more than an old-fashioned stick-up.”

Cummings and other members of the Committee questioned Brian Moynihan, President of Consumer and Small Business Banking, Bank of America; Timothy J. Mayopoulos, Former General Counsel of Bank of America; Charles "Chad" Gifford, Member of the Bank of America Board of Directors; and

Thomas J. May, Member of the Bank of America Board of Directors.

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