Two pieces of bad news for Bank of America today in the Wall Street Journal. BofA recently agreed to a $33 million settlement with the Securities and Exchange Commission after being accused of misleading shareholders about bonuses paid after BofA's merger with Merrill Lynch. But Jess Bravin reports that a judge has blocked the secret deal saying the public deserves to know what BofA CEO Ken Lewis and other top brass knew about Merrill's bonuses and its losses before shareholders voted to approve the $50 billion merger.

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Here's where it get really interesting. Dan Fitzpatrick tracks down office emails and BofA officials to prove the bank knew of a last-minute $3 billion hit Merrill's assets would take in the twilight of the 2008 before the shareholders vote to approve the deal. But, Fitzpatrick reports, the losses were considered "not material." James Cox, a securities prof at Duke University, calls B.S.:

It "is highly likely" that a change of $2 billion in Merrill's forecasted net losses "would be material, but it is even more likely to be material if this was indicative of conditions at Merrill that were deteriorating."

So Merrill's losses fell from negative-$7 billion to worse than negative-$9 billion two days before the vote. BofA held its collective tongue. But as the WSJ's awesome timeline to the right shows, that's the just the beginning of the story.

Less than two weeks after the shareholders approved the deal, Merrill's losses continues to spiral down to negative-$12 billion. Lewis got scared. He went to Fed Chair Ben Bernanke and then-Treasury Sec. Hank Paulson and begged out of the merger -- still without revealing Merrill's losses to his shareholders. Bernanke called Lewis' threat toothless. Paulson threatened to fire Lewis and his board if they tried to cancel the deal. So Lewis went home and BofA officially purchased Merrill.

Lewis has been sued by at least five pension funds for misleading shareholders about the Merrill merger, and Bank of America has reportedly begun to groom successors for CEO of BofA. As more of these stories continue to trickle out, and with the hearing over the bonuses looming, the guillotine looks to be falling ever-closer over Ken Lewis' head.

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