WASHINGTON, May 2 — The U.S. Department of the Treasury’s Office of the Special Inspector General for the Troubled Asset Relief Program issued the following news release:
The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) today announced that a $7.5 million settlement has been reached with Bank of America Corporation’s former Chief Financial Officer, Joe L. Price, regarding the bank’s actions as it sought to merge with Merrill Lynch & Co. in 2008. The settlement was first announced by the New York State Office of the Attorney General on Friday, April 25. As part of the settlement, Price is barred from serving as an officer or director of a public company for 18 months.
On March 26, it was announced that a $25 million settlement had been reached with Bank of America Corporation and its former Chairman and Chief Executive Officer, Kenneth D. Lewis, for actions during the bank’s merger with Merrill Lynch. As part of that settlement, Lewis was barred from serving as an officer or director of a public company for a period of three years.
Despite Bank of America top executives’ specific knowledge of mounting losses at Merrill Lynch that were forecast at more than $9 billion, the TARP recipient bank failed to disclose that information to shareholders prior to their vote on the proposed merger. It was also alleged that Lewis and Price misrepresented to shareholders the impact that the merger with Merrill would have on Bank of America’s future earnings.
“One of the legacies of the TARP bailout is the dangerous concept of moral hazard: The belief that someone can play by their own set of rules without worry about facing the consequences of their actions because taxpayers will bail them out,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “SIGTARP’s investigation with the New York Attorney General’s office revealed that Joe Price and Ken Lewisthought they could play by their own rules and mislead shareholders without any consequence and then mislead the Government into another TARP bailout. This settlement makes clear that those who break the law and try to turn to taxpayers will face serious consequences. SIGTARP and our law enforcement partners will aggressively enforce the law and bring individual and corporate accountability that contributes to ending moral hazard.”