Paulson Defends Bank of America-Merrill Lynch Deal

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• JIM LEHRER:

  A major bank, JPMorgan Chase, reported strong profits just months after the worst of the financial crisis. But a smaller lender, CIT, moved closer to filing for bankruptcy as the government indicated it would not bail out the company.

  And Congress continued to ask questions about the role of the government last fall. NewsHour correspondent Tom Bearden begins with that part of the story.

• TOM BEARDEN, NewsHour Correspondent:

  Former Treasury Secretary Hank Paulson testified on Capitol Hill today for the first time since leaving his post in January.

• CONGRESSMAN:

  Do you solemnly swear to tell the truth?

• TOM BEARDEN:

  It was the third and final House hearing looking into the government's role in the Bank of America purchase of Merrill Lynch at the height of the financial crisis last fall.

  After agreeing to the purchase, Bank of America discovered Merrill Lynch's losses were far deeper than expected and reportedly wanted out of the deal, but the company was pressured and even threatened by the government.

  Bank of America CEO Ken Lewis and Federal Reserve Chairman Ben Bernanke have testified already. Today, it was Paulson's turn, and he quickly defended his actions.

• HENRY PAULSON, Former U.S. Treasury Secretary:

  In the midst of a rapidly changing crisis, our responses were not perfect, but I am confident that they were substantially correct and that they saved this nation from great peril.

• TOM BEARDEN:

  Bank of America got an additional $20 billion from the federal government to cover Merrill Lynch's losses.

• HENRY PAULSON:

  My view and the view of numerous government officials working on the matter, the interests of the nation and Bank of America were aligned with respect to closing of the Merrill Lynch transaction.