Kenneth Lewis

Bank of America has been punished particularly hard over the last two years by losses and fines resulting from bad mortgages. But according to a federal lawsuit filed by shareholders cited in the New York Times, that could have been at least partly avoided had the firm’s leadership properly disclosed Merrill Lynch’s financial records — and the information on doomed mortgages contained within them — before purchasing it for $50 billion in 2008.

The court filings include sworn testimony from then-CEO Kenneth Lewis that he knew Bank of America’s estimated losses from the acquisition would be far greater than what had appeared in documents filed with regulators in the days leading up to the stockholders vote on the transaction. [more]