Taken from subpoenaed documents and news accounts, the following details Treasury Secretary Timothy Geithner’s involvement in the controversial merger between Bank of America and Merrill Lynch.  As the President of the New York Federal Reserve at the time, Secretary Geithner and his staff played an active role in the government-brokered merger.  Just as Bank of America CEO Ken Lewis, Federal Reserve Chairman Ben Bernanke, and former Treasury Secretary Henry Paulson have done, Secretary Geithner must now come before the House Oversight and Government Reform Committee to testify on this matter.

According to the notes, which were provided to the Congressional committee by Bank of America, Mr. Bernanke told him [Ken Lewis]: “Geithner, Summers and Paulson up to date. Geithner would like to see what is done as a template for the industry.”
(source: New York Times, June 12, 2009)

Geithner was also fully briefed and involved in the Bank of America-Merrill Lynch discussions in mid-December. According to Secretary Paulson’s personal schedule obtained by the Committee, after his conversation with Ken Lewis about the MAC [Material Adverse Clause] on December 19, 2008, the first person Paulson called was Geithner.(1)

An email Geithner sent the following day on December 20 – one day before Lewis backed down from the MAC threat – recording what appears to have been a discussion with Paulson on Bank of America pulling a MAC. It reads in part:

        BofA/ML [i.e., Bank of America/Merrill Lynch]. Can’t MAC. Have to close.
        Maybe more time than 1/1.(2)

On that same day, Geithner emailed Federal Reserve Governor Kevin Warsh to ask him:

        Are you all over [Bank of America/Merrill Lynch] and are you getting what you
        need from the troops? (3)**

            ** Indicates Geithner’s staff was doing the leg work on the merger, as one would expect 
                given the location of the New York Federal Reserve

Another email from Federal Reserve Bank of New York employee Arthur Angulo to New York Fed General Counsel Thomas Baxter also demonstrates the government’s concern to control the flow of information to the public and shareholders. In this email, Mr. Angulo says he will call Merrill Lynch’s Chief Financial Officer Nelson Chai:

        I’ll ask about: [Merrill Lynch’s] current estimate of [4th Quarter] loss[es] v[ersus]
        market expectations and whether and when [Merrill Lynch] intends to file an 8-K.
        If I get a sense that [Merrill Lynch] is leaning toward an early January filing,
        I’ll try to steer him toward a later filing. If I get a sense that [Merrill Lynch] is
        committed to an early January filing, I’ll ask for a follow-up discussion
        with appropriate securities counsel at [Merrill Lynch] to gain a better sense
        as to the amount of flexibility [Merrill Lynch] has in this regard.(4)

Citations:
(1) Paulson personal schedule provided to the Committee.
(2) See email, Timothy Geithner, Federal Reserve Bank of New York, (December 20, 2008), Bates BOG-BAC-ML-COGR000309.
(3) See email, Timothy Geithner, Federal Reserve Bank of New York, (December 20, 2008), Bates BOG-BAC-ML-COGR000310.
(4) See email, Arthur Angulo, Federal Reserve Bank of New York, (December 22, 2008), Bates BOG-BAC-ML-COGR-000127.