Ken Lewis wanted out of the deal

Bank of America CEO Ken Lewis, aghast at the mounting losses at Merrill Lynch, wanted to back out of the deal not too long ago, according to a Fortune report. Lewis arranged a meeting with his government handlers and told Ben Bernanke and Henry Paulson point blank that Merrill's losses were much worse than expected. Thus, he was within his rights to invoke a "material adverse effect" clause in the deal contract. His request was denied. They told him Bank of America had to close the deal, or else the whole financial system would be at risk. Lewis had no choice. When it came time to fire Thain, the meeting took only five minutes. Ultimately, however, Lewis will have to shoulder the responsibility. I'll say it again: He has bet his future on the Merrill deal.

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