Bank of America (NYSE: BAC) failed to satisfy a deadline on Monday lawmakers had set for the bank to hand over additional information in regard to its Merrill Lynch acquisition. The deadline was set after a federal judge shot down a $33 million settlement the bank reached with the Securities and Exchange Commission.
Bank of America’s failure to meet the deadline set by the House Oversight Committee could very well lead to a subpoena. Recent reports have said a BofA senior bank executive and the committee chairman are likely to meet on Tuesday.
Additionally, the SEC, who originally agreed to the settlement that was thrown out, announced it is now taking Bank of America to trial for misdirecting investors when not clearly disclosing it had authorized up to $5.8 billion in bonuses to Merrill employees shortly before the acquisition.
The SEC lawsuit is just another legal battle over the Merrill Lynch deal that the bank already faces. New York Attorney General Andrew Cuomo has been doing its own investigation and is expected to file civil fraud charges against some bank executives in the near future. Also, the countless shareholder lawsuits the bank faces are yet another hurdle in the Merrill Lynch fallout.
Elsewhere, Bank of America has reached an agreement it sought with the government to exit a loss sharing deal it entered when acquiring Merrill Lynch. The deal basically gave government backing to $118 billion risky assets that Bank of America inherited in the Merrill Lynch acquisition.
However, that insurance was never tapped so the bank wanted to end the agreement at no cost. Lawmakers argued that Bank of America benefited from government backing and should pay a fee to exit the agreement.
The terms reached call for Bank of America to pay a sum of $425 million to a handful of agencies, such as the U.S. Treasury Department. The move is the first step in unwinding the government’s support of the bank, which hopes to repay TARP funds this year as well.
