Bank of America just can't catch a break. First it gets caught in a trap of a "non-settlement" settlement which will only expose it to billions more in legal fees and other reserve fund increases, and now this. From the WSJ: "New York state Attorney General Eric Schneiderman has issued subpoenas seeking new depositions from the Charlotte, N.C., bank's chief executive and other current and former executives, according to people familiar with the situation. The subpoenas are a sign that Mr. Schneiderman, who became New York's top law-enforcement official this year, doesn't intend to drop the civil-fraud investigation of Bank of America begun more than a year ago under predecessor Andrew Cuomo." Perhaps it is about time Ken Lewis finally get some primetime TV exposure where he belongs: on the defendant's chair. "Mr. Lewis, who retired partly because of rancor over the Merrill deal, declined comment through his lawyer. Mr. Price's lawyer couldn't be reached to comment." Considering the complete disaster New York prosecutors have now completed with the DSK arrest, they will need a very high profile arrest and conviction to make up for it. Kenny boy sounds like just the type to fit the bill.
From the WSJ:
The attorney general's office and Bank of America have clashed recently about how to proceed in the Merrill case. In court filings, Mr. Schneiderman's office said it intended to begin its depositions, but Bank of America asked a judge to delay any depositions until the attorney general produced certain documents disclosing communications between employees who worked with Mr. Cuomo and outside parties.
Last week, New York state Supreme Court Judge Bernard Fried ruled that Mr. Schneiderman must hand over the documents requested by Bank of America, describe the parameters of the search for the documents, and list any documents not produced on grounds of privilege. The judge also ruled that depositions wouldn't begin for 90 days.
Pressure from U.S. regulators contributed to Bank of America's decision to buy Merrill as the firm teetered in 2008. The deal was struck the same weekend that Lehman Brothers Holdings Inc. tumbled into bankruptcy.
The legal friction with Mr. Schneiderman is the latest reminder that Bank of America is a long way from shedding legal and financial wreckage of the crisis. The bank's 2008 takeover of mortgage lender Countrywide Financial Corp. culminated in this week's $8.5 billion settlement with holders of mortgage-backed securities issued by Countrywide.
Of course, at the bottom of the whole BofA-Merrill fiasco is none other than Hank Paulson who pressured Ken Lewis to take the deal or else. But not even we are that naive to hope that Paulson will ever go to court for any other reason. After all, if anyone watched the straight to HBO movie by a NYT reporter, Hank could do no wrong.
Although Agent Orange sure could (courtesy of the most value destroying M&A transaction in the history of corporate finance). Perhaps it is also time to take another long hard look at Mozillo (and not giggle).