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February 9, 2010

  • BofA Under Fire, Pt.4
      Making an example of the big guys.

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    The New York's State Attorney General, Andrew Cuomo, charges Kenneth Lewis and Joseph Price with massive fraud and deception saying the two deliberately withheld Merrill Lynch's financial woes causing taxpayers and the credit card company's stockholders to lose billions of dollars. In a press release, Cuomo said the activities Bank of America's unethical behavior follows a much larger model within the credit card and financial industry. Cuomo is taking aim at the nation's largest credit card company and financial institution and expects to make them an example of what's in store for the future.

    Although Brian Moynihan was involved in the Merrill Lynch merger which is at the center of the controversy and lawsuit, it is reported that he has been cooperative and transparent in dealing with Cuomo and other law enforcement agencies. It is also reported that Moynihan is expected to testify for the prosecution at the trial. If true, it would help to boost the reputation of the giant credit card company as it now works on rebuilding the confidence and trust of stockholders and taxpayers.

    Joining Cuomo in his fight against corruption is Niel Barofsky, Special Inspector General for the Troubled Asset Relief Program (TARP). Lewis and Price are also accused of threatening the government that BofA would pull out of the Merrill Lynch deal if the credit card magnet was not granted the additional TARP funds to support Lynch's debt. Apparently, Henry Paulson, Secretary of the Treasury, and Ben Bernanke, Federal Reserve Chairman both guaranteed BofA the additional funds if they merged with Merrill to prevent a financial meltdown.

    If Cuomo gets his way, Lewis, Price, and BofA would be prohibited from conducting any such deals in the future. Additionally, the defendants will be required to repay credit card customers, stockholders, taxpayers, and any other individual or group restitution and damages in additional to penalties and fines. It is certain that over the next week, all eyes will be on what's going on with Cuomo, Lewis, Price, Moynihan, and Bank of America.

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