The Bank of America/ Merrill Lynch Deal: Questions, Questions

The Wall Street Journal's excellent front page story on the details behind the Bank of America purchase of Merrill Lynch raises many, many questions, both political and legal.  The story reveals a Secretary of Treasury that forces an unwilling CEO of one of the country's largest banks to close a deal for one of the country's largest brokerage firm.   The Secretary of the Treasury 1) impliedly threaten to fire the CEO through the country's bank regulatory system (even though it holds no-voting stock), 2) offered the CEO more government cash (which only came out several week later) to close and 3) appealed to the CEO's patriotism.  The CEO took the cash, did not tell shareholders who have to vote on the deal a few days later, and later told reporters "he did it for the good of the country."  As the Bank of America stock tanks on worries that the government will have to nationalize the bank, plaintiffs' lawyers are have a feeding frenzy, suing on allegations of, among other things, insufficient disclosure around the shareholder vote.  If the government does nationalize the bank, the government will pay damages, if any, from the shareholder suits. 

Man; this is a story for the ages.  We will learn more when the inevitable best-selling book comes out on the deal.

The political issues:.  1) Do we want a Treasury Secretary making these kinds of calls on deals?  2) on leadership in major private banks?  On the legal issues:  1) How could BofA lawyers give advice not to disclose on the shareholder vote? 2)Why should Lewis pay attention to Fed lawyers on the MAC clause?  3) How can Lewis not put BofA shareholders first (BofA is a Delaware corporation and Delaware has no constituency statute)?  The over-riding management issue:  Why did Lewis not have the guts to tell Paulson to go to hell -- that he was not closing a deal that would kill his company?