In response to the financial credit crisis in the fall of 2008, Congress, the U.S. Treasury, and the Federal Reserve Board of Governors took unprecedented action to prevent both large and small financial institutions from insolvency. Ultimately, the Troubled Asset Relief Program was created to inject various banks with the cash necessary to prevent the banks' insolvency and the threat that bank failures posed to the nation's economy. In the midst of that crisis, Bank of America agreed to acquire Merrill Lynch. Each institution, in their individual capacity, received TARP funds from the Treasury several weeks after entering into the merger agreement. But, as Merrill Lynch suffered drastic losses in the fourth quarter of 2008, Bank of America eventually received even more money from the Treasury after consummating the merger in January 2009. What subsequent SEC filings, news reports, and state and congressional investigations reveal is that the Government pressured Bank of America management and directors to close the deal despite Bank of America's reluctance to do so and Bank of America having a strong legal argument in support of its desire to walk away from the deal. Bank of America's submission to the Government demonstrates that corporate governance, short of best practices, in a time of crisis can and will significantly destroy shareholder wealth.
James K. Donaldson, You Can Come under the Tarp, but First... The Bank of America-Merrill Lynch Merger Was a Failure of Corporate Governance, 9 Fla. St. U. Bus. Rev. 21 (2010).