BofA's Deal for Merrill Awash with Questions

Bank of American closed its purchase of Merrill Lynch on January 1 of this year.  BofA shareholders voted to ratify the deal on Dec. 5 of last year.  We now know facts that we did not know at the closing and that the shareholders of BofA did not know when they voted to ratify the deal.  At some time in early December, the CEO of Bank of America knew that Merrill's debts were worse than he had anticipated when he priced the deal.  Paulson and Bernanke urged him to close anyway and, apparently, offered government support.  Traders and shareholders knew none of this until mid-January.  This is lawsuit heaven.  The government will not get sued, of course, but Bank of America will -- for federal securities act violations and for breach of fiduciary duty.  But the government's role will be an odd one; with government supporting confidentiality and the SEC floating around the lawsuits of lack of disclosure we will see some very fancy high stepping.  This will take years to play out but it is well worth the watch.  Once again Paulson comes up short in the crunch.