KEN LEWIS, Bank of America chief executive, faced aggressive questioning in US Congress yesterday over the circumstances surrounding the troubled takeover of financial services firm Merrill Lynch last year.

Mr Lewis testified that he had no recollection of asking federal regulators in the chaotic weeks leading up to the Merrill Lynch deal for a letter that would protect him from shareholder lawsuits.

He was then presented with an e-mail from US Federal Reserve chairman Ben Bernanke alleging that Mr Lewis had asked for permission to say that the government had ordered him to complete the transaction.

In a congressional hearing, Mr Lewis also swatted away questions about why he did not disclose Merrill’s mounting losses to his shareholders before they voted on December 5th to approve the Merrill deal, or afterwards, when Merrill’s escalating losses caused him to threaten the invocation of a “material adverse change” clause to scuttle the transaction.

Mr Lewis also adamantly denied that former treasury secretary Hank Paulson’s pledge to remove Mr Lewis and his Bank of America board if Mr Lewis invoked the “MAC” clause was a “threat” that drove his decision to consummate the transaction.

“It was a strong influence on my decision, but it wasn’t the only influence,” he said.

Dennis Kucinich, a Democrat congressman, accused Mr Lewis of either doing a poor job of due diligence on the Merrill deal, or being less than forthcoming with Bank of America’s shareholders.

“Isn’t it true that Merrill Lynch’s losses in December were not the largest week-to-week losses you saw?” asked Mr Kucinich. “Wasn’t the week-to-week loss in November larger?”

Mr Lewis replied, saying: “I can only tell you what I just said, that part of November losses were causing this projection we were getting in December . . . They were a factor.”

When Mr Lewis said he did not recall asking regulators for a letter of assurance from regulators saying he was ordered to complete the Merrill transaction, Mr Kucinich quoted from an e-mail sent by Mr Bernanke in late December.

Mr Kucinich said the e-mail, referring to Mr Lewis, stated: “He said he now fears lawsuits from shareholders for not invoking a material adverse change clause, given the deterioration at Merrill Lynch.

“He asked if he could use as a defence that government ordered him” to proceed with the transaction. “I said no.” – (Copyright The Financial Times Limited 2009)