Ken Lewis, head of Bank of America (BAC), may be the most reviled financial executive in the United States. He bought Merrill Lynch when it was hemorrhaging money. He let big bonuses to Merrill management slip by.  Some analysts believe that Merrill’s problems were so deep that they forced B of A to take TARP money that otherwise could have been passed up.

But, a new, exclusive report from The Wall Street Journal shows that Lewis is a hero of the first order. He saved the financial world from ruin by going along with a plan concocted by the Treasury and Fed to keep Merrill’s problems confidential while allowing the B of A buyout of Merrill to continue.

According to the paper, “Federal Reserve Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America Corp. to not discuss its increasingly troubled plan to buy Merrill Lynch & Co.” The reason for the silence is that bad news about Merrill’s losses or a collapse of the B of A acquisition could have cause a panic in the financial markets at a point when Wall St. was already worried that some big financial firms might not make it.

Governance experts would say that B of A was duty bound to disclose its reservations about Merrill to the bank’s shareholders so that they would not be caught by surprise when bad news about the merger began to become public.

The Lewis testimony is almost certainly self-serving. His job has been at stake based on the fact that he did not call off the deal to buy Merrill or at least drop the price of the acquisition. Lewis is testifying that the federal government held a gun to his head and basically asked him to lie, or at least not tell the whole truth.

Lewis has been perceived as a weak punk who would say nearly anything to keep his job. He has repeatedly appeared in the media defending his actions, even to the point of saying that he regrets having taken TARP money. His comments about a government conspiracy indicate how unbalanced his view of his decisions really is.

Douglas A. McIntyre

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