Paulson chastised over Merrill Lynch deal

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WASHINGTON, July 16 (UPI) -- Congressional leaders chastised former U.S. Treasury Secretary Henry Paulson Jr. for his role in pressuring Bank of America to purchase Merrill Lynch.

Several members of the House Committee on Oversight and Government Reform said Thursday Paulson misled Congress in previous explanations of the deal, which resulted in an additional $20 billion bailout for Bank of America, which purchased the ailing Merrill Lynch in the first week of the year.

"While all this was going on, the American people, investors and Congress were kept in the dark," Committee Chairman Edolphus Towns, D-N.Y. told Paulson, The New York Times reported.

"What the taxpayer got was an averted calamity," Paulson said.

In a prepared statement, Paulson said he pressured Bank of America to purchase Merrill Lynch, as no deal would have been "unthinkable."

The controversy arose when Bank of America's Chief Executive Officer Kenneth Lewis testified regulators threatened to remove bank executives from their jobs if the deal did not go through, The Washington Post reported.

Lewis said escalating losses at Merrill Lynch had him pause on a deal the bank had studied for months.

Paulson, however, makes no bones about threatening jobs at the bank. Canceling the deal threatened the greater financial system and had "no legal basis," Paulson said.