New documents support the theory that Bank of America Corp. threatened to abandon the Merrill Lynch & Co. Inc. deal as a way to get more government aid.

B of A officials discussed their potential benefit from a government rescue the day before telling U.S. officials that B of A was considering walking away from buying Merrill, according to handwritten notes and e-mails subpoenaed by a congressional committee.

They would appear to undermine B of A's repeated contention that it was convinced that it had a reasonable basis to walk away from the Merrill deal, according to people familiar with the investigation. They also appear to lend credence to the theory by investigators that the threat to abandon Merrill was used to get more government aid, the people said.

"What ask govt for?," "ringfence assets — what Citi just did" and "go to Fed?" are among handwritten notes from a meeting between B of A and its outside counsel Dec. 16. That's the day before Chief Executive Kenneth Lewis called then-Treasury Secretary Henry Paulson to say that the bank might invoke a "material adverse change" clause to walk away from the deal.

The documents, obtained by Dow Jones Newswires, also show that B of A's outside lawyers were not convinced that B of A would succeed if it tried to walk away from the deal and had to go to court. Two days before Lewis' call to Paulson, lawyers at Wachtell, Lipton, Rosen & Katz said not enough data existed to make a determination whether the bank could invoke the MAC clause.

"So it is not enough to show a short-term earnings decline, no matter how severe. Must show decline in value over period of years, not months," an analysis performed by the firm said. "We would need more data to analyze this."

Later in the same memo, lawyers said results from one quarter were not enough to prove a material change under B of A's merger agreement with Merrill.

The documents also suggested that B of A fired its general counsel, Timothy Mayopoulos, after he questioned the bank's case to invoke the MAC. After that Dec. 1 conversation with chief financial officer Joe Price and vice chairman of corporate development Gregory Curl, Mayopoulos was not included in subsequent conversations about the merger and was told on Dec. 10 that he was terminated. In an interview with the committee, Mayopoulos said he did not know why he was fired.

B of A spokesman Larry Di Rita said the documents only tell part of the story of B of A's deliberations during that period.

"There was alignment or consensus among outside counsel, internal counsel and the senior leaders of the company that there was a good-faith basis for a MAC," Di Rita said.

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