New York Attorney General Andrew Cuomo filed fraud charges against Bank of America and its former top executives this morning, alleging the bank manipulated the company's shareholders and the federal government in order to carry out a merger with Merrill Lynch.
According to the lawsuit, former CEO Ken Lewis and former CFO Joe Price hid more than $16 billion worth of losses at Merrill from shareholders in order to ensure their approval of the merger. But after shareholders voted to buy the ailing firm, the bank approached the government to demand an infusion of taxpayer cash. Without bailout funds, they told regulators, BofA would be unable to complete the merger. The government capitulated and funneled $20 billion of TARP money into the bank.
Attorney General Cuomo called Bank of America's conduct "a classic example of how the actions of our nation's largest financial institutions led to the near-collapse of our financial system":