New revelations put renewed pressure on B of A management
The question goes around and around. What did Bank of America (BAC) know about Merrill Lynch's fourth quarter 2008 prospects before it closed its acquisition of the brokerage firm? Were the big losses something that B of A knew about in detail, or did Merrill effectively hide some of them? If so, B of A officials may have been surprised by the magnitude of the problem
Bank of America CEO Ken Lewis has tried to distance himself from the questions of how much he knew about Merrill's problems late last year. But that is becoming harder to do as time passes.According to the Financial Times, "Bank of America was directly involved in markdowns that contributed to Merrill Lynch's $15.3 billion loss in the last quarter of 2008, its final reporting period before the Wall Street bank was acquired by B of A." Until the entire report sees the light of day, it will be hard to determine whether the bank's story about how things went down, which distances it from Merrill's accounting decisions, is accurate.
One of the most telling aspects of the "he said, she said" PR battle over the Merrill numbers is that B of A's chief accounting officer, Neil Cotty, was asked to sign the brokerage's 10-K after Merrill's CFO quit. Let's hope he read the entire document before giving it his John Hancock.
Douglas A. McIntyre is an editor at 24/7 Wall St.