17 Sep 2009

Bank of America directors called for questioning

9:36 pm on 17 September 2009

Five current and former directors of Bank of America have been summoned for questioning by New York's Attorney General as part of investigations into the bank's takeover of Merrill Lynch last year.

Bank of America saved Merrill Lynch from collapse a year ago and the directors are likely to be asked how much they knew of Merrill Lynch's problems and bonuses when they agreed to buy it.

Earlier this week, a United States federal judge ruled the bank would have to go to trial to settle allegations it misled shareholders about bonus payments.

District Judge Jed Rakoff rejected the $46 million settlement between Bank of America and its regulator, the Securities and Exchange Commission.

Merrill executives were paid $5 billion before the deal was closed, despite the bank's $39 billion losses for 2008.

Bank of America has neither admitted nor denied the allegations.

It was one of the biggest recipients of bail-out funds from American taxpayers in 2008, needing capital injections at the height of the financial crisis.