BofA Exec on Merrill Deal: "Screw the Shareholders"

The exchanges were among emails and other documents the bank turned over to the House Committee on Oversight and Government Reform this week in an effort to answer questions about the controversial deal.

The committee, along with the attorney general of New York and the Securities and Exchange Commission, is investigating whether Bank of America misled shareholders when it neglected to tell them that it had promised to pay Merrill executives as much as $5.8 billion in bonuses once the deal was approved.

A federal judge in New York recently refused to approve a $33 million settlement between the bank and the SEC over the issue, saying that the former had failed to identify the executives responsible for the decision to omit information about the bonuses from the proxy material. In court, the bank claimed that it had acted on its attorneys' advice, but refused to provide details, citing attorney-client privilege.

Rep. Adolphus Towns, chairman of the oversight committee, told the bank earlier this month that it would not be permitted to use such a defense before congress.

The documents released this week do not prove that Bank of America executives knew they were misleading shareholders, the New York Times reported. But they do show that they knew things inside the two companies were worse than many shareholders understood. And they show that executives were nervous that their communications might some day be subpoenaed.

In an email exchange following a particularly dire assessment of Merrill's books, one member of the bank's board of directors was blunt. "Unfortunately it's screw the shareholders!!" Charles K. Gifford wrote Thomas May, another member of the board.

"No trail," May responded, suggesting that they not commit their views of the matter to email.

Gifford replied that he meant to place his words in "the context of a horrible economy!!! Will effect everyone."