Federal Reserve subpoenaed over role in Merrill Lynch buyout

WASHINGTON — House lawmakers on Tuesday said they had subpoenaed the Federal Reserve to hand over e-mails, notes and other documents related to its role in Bank of America Corp.’s acquisition of Merrill Lynch & Co.

In question is whether the Fed, along with the Treasury Department, pressured Bank of America into buying Merrill Lynch. The Fed and former Treasury Secretary Henry M. Paulson have denied doing so.

The subpoena by the House Oversight and Government Reform Committee comes as Bank of America chief Kenneth Lewis is expected to testify Thursday before the panel.

In prepared remarks, Lewis said his company had considered stopping the deal at one point because of “significant, accelerating losses” at Merrill Lynch. The bank decided to move forward with the deal after the government offered to provide assistance, he said.

“This course made sense for Bank of America and for its shareholders, and made sense for the stability of markets,” Lewis said.

Lawmakers say they are unconvinced that the Fed didn’t take an active role in pressuring Bank of America to follow through with the deal and keep quiet about its worsening terms.

The panel, led by Rep. Edolphus Towns (D-N.Y.), has been investigating the matter as well as the $20 billion in taxpayer money provided to complete the acquisition.

“The marriage between Bank of America and Merrill Lynch was a shotgun wedding pushed by the Federal Reserve,” said California Rep. Darrell Issa (R-Vista), the panel’s top Republican.