Federal Deposit Insurance Corp. Chairman Sheila Bair said Friday that her agency was reluctant to take part in giving federal aid for Bank of America Corp.'s takeover of Merrill Lynch, but later consented.

Bair told lawmakers Friday the FDIC had raised doubts last December that its assistance — involving participation in guarantees against Merrill losses — was needed.

"Based upon information that was made available, the FDIC continued to raise questions about whether any assistance was necessary," she said, testifying in what has been a series of House Oversight Committee hearings looking into the merger. "The FDIC made no commitment to provide assistance to" B of A "at that time."

In January, as former Treasury Secretary Henry Paulson advocated for FDIC assistance, the agency still was not ready, Bair said. "We continued to gather information about whether any assistance was necessary," she said, adding later, "The FDIC continued to refrain from a commitment of assistance."

But after further discussion, in which the Treasury and the Federal Reserve Board expressed concerns that B of A could pose a systemic risk, and the Fed's completion of a draft agreement for an aid package, Bair said her agency agreed. The assistance was announced Jan. 16.

"The FDIC's board ultimately was persuaded that [B of A's] condition presented a systemic risk," she said.

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