Kucinich Prepared Statement In Today's Bank of America Hearing

As a reminder, here is the link to the live webcast.


After reviewing over 400,000 pages of documents and interviewing the key players at Bank of America, Merrill Lynch and the law firm of Wachtell, Lipton, Rosen & Katz, we have found evidence of possible securities law violations at Bank of America:

  • Bank of America relied on the November 12 forecast for Fourth Quarter ‘08, created by Merrill Lynch, that, omitted any forecast of how collateralized debt obligations, subprime mortgage backed securities, credit default swaps – would perform in the quarter.
  • The former Merrill CFO admitted to staff that the November 12 forecast was not, in fact, a valid forecast.
  • Bank of America knew at the time that the November 12 forecast was of “questionable validity.”
  • However, Bank of America did not do any actual financial analysis to make up for the Merrill omissions. Instead, Bank of America merely pulled a number out of thin air on November 13, which was recorded on the forecast document as the “gut” feeling of Neil Cotty, Bank of America’s Chief Accounting Officer. Bank
    of America simply created an assumption that Merrill Lynch’ illiquid assets would almost break even for November, thereby spreading October’s bad results over two months.
  • The attorneys at Bank of America and at Wachtell, Lipton did not question the financial information they were given, in spite of the glaring and obvious omission and the explicit reference to a “gut” feeling. They advised Bank of America not to make further disclosures to its shareholders in advance of the merger vote, based on the information in the deficient forecast and a “gut” feeling.

Within only weeks, however, reality crowded out wishful thinking. Merrill Lynch’s exotic investments continued to lose large amounts of money, causing Merrill to lose over $21 billion in just the Fourth Quarter. Bank of America went running to the U.S. Government for a rescue.

Full statement:



No comments yet! Be the first to add yours.