Officials ‘instructed’ silence, Lewis said

Bank of America Chief Executive Officer Ken Lewis said U.S. officials instructed him to keep quiet about the bank’s purchase of Merrill Lynch.

Transcripts of testimony given to the New York State attorney general’s office in February, reveal that Lewis believed former U.S. Treasury Secretary Henry Paulson Jr. and Federal Reserve Chairman Ben Bernanke had told him to keep the Merrill Lynch negotiations under wraps, The Wall Street Journal reported Thursday.

When asked if he was instructed not to tell shareholders, about the deal, Lewis replied, I was instructed that we do not want a public disclosure.

Lewis said Paulson threatened to remove him from his job if the deal collapsed.

A failure of Merrill Lynch, he was told, would impose a big risk to the financial system, he said.

A source close to the deal said Bernanke had suggested Lewis talk to his own attorneys concerning disclosure.

A spokeswoman for Paulson said, the U.S. government was committed to ensuring that no systemically important financial institution would fail, the Journal said.

Regulators, commented Jonathan Macey, deputy dean of Yale Law School, are supposed to tell you to obey the law, not to disobey the law.