U.S. "pressured" BofA over Merrill deal

By Grant McCool and Jonathan Stempel

NEW YORK (Reuters) - Bank of America (BAC.N) CEO Kenneth Lewis was pressured by senior federal officials Henry Paulson and Ben Bernanke to accept a merger with troubled Merrill Lynch or lose his job, New York Attorney General Andrew Cuomo said on Thursday.

In a letter to senior members of congressional committees and the head of the U.S. Securities and Exchange Commission, Cuomo said Lewis met then U.S. Treasury Secretary Paulson and Federal Reserve Chairman Bernanke in Washington in mid-December.

Cuomo said the SEC, which is charged with protecting investor interests, "appears to have been kept in the dark" about talks between the banks and federal officials that followed.

"During those meetings, the federal government officials pressured Bank of America not to seek to rescind the merger agreement," Cuomo wrote. "We do not yet have a complete picture of the Federal Reserve's role in these matters because the Federal Reserve has invoked the bank examination privilege."

A spokesman for Paulson said on Thursday that the Treasury and the Federal Reserve believed there was no reasonable legal basis for Bank of America to terminate the Merrill deal.

Lewis testified in a probe by Cuomo that Paulson wanted the Merrill acquisition to go through "to stem a financial disaster in the financial markets."

He also testified that Paulson and Bernanke pressured him to keep quiet about losses at Merrill, which rose to $12 billion (8.15 billion pounds) from $9 billion in a matter of days in December. The fourth-quarter loss reported ultimately totalled more than $15 billion.

"No one at the Federal Reserve advised Ken Lewis or Bank of America on any questions of disclosure," Fed spokeswoman Michelle Smith said in an email on Thursday in response to a question.