As the bank's then-general counsel, Brian Moynihan late last year wanted the government to fill the "capital hole" created by Merrill's fourth-quarter losses. The terms had to be "extremely favorable" for the bank to give up its effort to back out of the deal, Moynihan, now the bank's consumer banking head, wrote in an e-mail days before the deal closed Jan. 1.
The documents also suggest the bank was interested in negotiating a lower purchase price for Merrill, although that never came to fruition. They also show that incoming Obama officials, including now Treasury Secretary Tim Geithner and White House economic adviser Larry Summers, were apprised of the discussions a month before they took office.
The documents obtained by the Observer are among the more than 1,000 pages provided to the House Oversight and Government Reform Committee, which is investigating the circumstances of the Merrill acquisition. They provide a glimpse of the conversations among bank leaders, their outside lawyers and government officials as they raced to shore up a deal that was helping to prop up a shaky financial system.
A spokesman for Republicans on the House committee said the new documents show a deeper level of collaboration between bank and government officials. The deal has left taxpayers footing the bill, and the assorted parties pointing fingers.