Ken Lewis and Hank Paulson

Don Corleone: Here’s my proposal. Forget about the penny-ante money in heroin, gambling, and extortion. Let’s buy some banks instead. Then we can steal billions.

Ken Lewis, CEO of BofA, says he was clubbed by Hank Paulson into buying Merrill. But he forget to divulge to shareholders that Merrill had gigantic losses.

But not only did listening to Paulson nudge Lewis into screwing over Bank of America (BAC) shareholders, it’s also landing him in hot water with the SEC. Because, you know, you’re really supposed to let shareholders know about material information like “devastating losses” when it comes up. Lewis didn’t.

SEC will no doubt investigate. Let’s see if it goes anywhere.

Mish is even blunter. Let the criminal indictments begin: Paulson, Bernanke, Lewis
Coercion To Commit Securities Fraud

A strong case can be made that Paulson and Bernanke coerced Lewis to carry out a merger agreement that was not in Bank of America’s shareholders best interest. Lewis arguably did so only to save his own job and the board.