Paulson slammed on BofA-Merrill deal

By Mark Felsenthal and Alister Bull

WASHINGTON (Reuters) - U.S. lawmakers on Thursday ripped into former Treasury Secretary Henry Paulson over the government's role in Bank of America's merger with Merrill Lynch and other actions to cope with the deep financial crisis that gripped the country last year.

Lawmakers renewed criticism that Paulson and Federal Reserve Chairman Ben Bernanke suppressed information about the deal and bullied Bank of America executives into going through with it despite worries about newly identified losses at Merrill.

"The American people, investors and the Congress were kept in the dark," Rep. Edolphus Towns told Paulson at a hearing.

"There was no oversight to determine whether this arrangement made sense. In my view, this is unacceptable and must be prevented from happening again," said Towns, the New York Democrat who chairs the House of Representatives Oversight and Government Reform panel.

Lawmakers broadened their attacks, angrily asking Paulson, a former chief executive of Goldman Sachs, to explain changes in administration policy during the crisis and saying he had conflicts of interest in decisions involving Wall Street firms.

"You don't feel any kind of scintilla of ethics on this thing at all?" Florida Republican Rep. Cliff Stearns asked.

"Totally," replied Paulson, who maintained his composure throughout most of the three-and-a-half-hour hearing but showed exasperation on one or two occasions. "I operated very consistently within the ethics guidelines I had."

"INTIMIDATION AND DECEPTION"