tr'rorn: RKim@wlrk.

com
Senl: Sunrlny, Decernber 21,2008 l:33 AM (GMT)
To: joe-price@bankofamerica-com; NGDunm@wlrk.cott;
brian. t. m oynihan(D,b ankofameri ca. com
Cc: EDHerlihy@wlrk.com; EMRoth@.wlrk,com; MGuest@wlrk-corn; PCHein@.wlrk.com
Subject: RE: PNVILEGED

Id have Ken prepared to go over a lis of points at to why BAC has decidd nol to nove forward with the deal
*/o governmént assist¿nce but am inclined not to raise thern on his own - would rather focus the call on how to
get the deal done.

RichardK. Kim
Wachtell, Lipton, Rosen & Katz
2t2-403-1354

From : Pr ice, Joe [ma iho:joe. price @ban lofamerica.com]

Sent: Saturday, December 20' 2008 8:21 PÞt
To: K¡m, Richard K.; Demmo, Nidolas G.; Moytlihan, Brian T. (Bank of America Corpomtlon)
cc: Hedlhy, Edwad D.; Roth, Erlc M.; Guest, Matthew M'; Heln, Peter C.
Suþect REr PRIVILEGED

Should we interþct a concept broader than jusl a MAC (in addition to Richard's comment) - more around
MAO/misre prese r¡tation/et a|....

From: RKim@w'lrk.com lmailb:RKim@wlrk-com]

SenÈ Saturday, December 20,2008 8:19 PM
To: Price, Joe; NGDemmo@wlrk.com; Moynihan, Brian T
Cc: EDHerlihy@wlrk.corn; EMRoth@wlrk,com; MGuest@wlrk'com; PCHein@wlrk.com
Subject RE: PRIVILEGED

I would revise the third bullet to say:

l. ¡ We are still of the view that there has been a MAC at Merrill - a¡d every day their numbers
get
\¡l-orse. Mse fundamentally, acquiring Merrill in its currenl state could do trernendous damage to BAC.
However, we understand your concerns and are commitæd to working together to find a uay to move
forwæd with the acquisilion without destabilizing our franchise-
2
3

I think we need to try focus the regulators' attention on the Fact thal acquiring lvfenill would be unsafe a¡ld
unsound and away from whether a MAC has occurred. Much more difTicult for frern to counter.

RichudK, Kim
'Wachtell- Lipton, Rosen & Katz
2t2-403-7354

From: Price, Joe [mailto:joe.price@ban}ofamerica'com]

Gonf identia I Treatnrent Requested BAC-ML-HOGR-502-00000944

 Senu Saturday, December20,2008 8:06 PM
To: Dernrno, Nicholas G.; Moynihan, Brian T' (Dank of Arnerha Corporation)
Cc; Herlihy, Edward D.; Roth, Eric M.; Kim, Rhhard K.; Guest. Matthew M.; Hein, Peter C.
Subjecù RE: PRIVILEGED

He needsto undersland the exposures are differentthan Citi and the number is 1S0ish when includil[ derivates and
synthelics othenvise, thal makes sense lo rne
-
From: ÀEDemmo@wlk.ærn [mailto:NGDemmo@whk.com]
Senù Saturda¡ December 20, 2008 7:44 PM
To: Price, Joe; MoynitBn, Brian T
Gc EDHerlihy@wlrk.com; EMRothGrwlrk,corn; RKim@wlrk.com; MGuçt@wlrk.corn; PC|-þin@wlrk'com
SUbJCC: RE: PRIVILEGED

Brian had a good suggeslion, whici was lo cut back lhe dete¡l for Ken/Hank discussion purposes, I was gci ng to kill th e
existing langusge and replace wilh " The ring-fencing would be structured similarly to the Citi stucture, except that the
pool wõuld be Jpprorirnalely $80 to $100 billion. This would hetp BAG- creab statility and co-nfidence that the Menill
iesulb seen in thä fouilh quarter rlrouH not be repeated.' Maybe we should say thet lhe pool would ''heve ân
approxlmate notonal amount of $80-10O'?

F rom i Pr ice, Joe [ma i lto :joe. price @ban kofamerica.com]

SenB Saturda¿ December20, 2008 7:36 PM
To: Dernmo, Nlcholas G.; Moynlhan, Brlan T. (Bank of Amerlca Co¡poratton)
Cc: Herlihy, Edward D.; Roth, Eric M.; Kim, Richard K.; Guest, Maühew M.
Subjecü RE: PRIVILEGED

Nick,

See below

4. l.
5. 2. o The ring-fencing would be sinrila¡ æ tbe Citi structure' excePl that
6. 3.
ryntlretic as¡sets ând derivative er(posure. The expostrres arc differenl lhat Citi's given the diftÞrent
typesoftrorbtcdbusinessesatMenill- poePrice]willprovidelheassetdetailstotheFedandto
your
-4.
team:
7.
inclurling the derivative ancl synthetic notions of 70 billion - note that. this exclt¡des the corporate
credit lending facilities and potential counterparty ris we are still working fhrough];
5.
sharing Ígol% of the losses after that point, up to a maximum of $[J. 't'he remaind_e¡wor¡ld be
t1]
fundcd by thc Fcd with a non-fccours¡c loan, subjcct to a [10]% loss sharing by BAC
9. 6.
l, )o/o dividend rate, split between the Treasury and the FDIC as you delerrnine.

10. i. I think yor¡ have ro let him know we are talking something other úari accn¡al based assets -
which was a lot of Citi's number
I l. 8.
12. 9. Plus
13. lo.
t4. I¡ Just say reduce diridend withoul the other items about keeping it there.

Gonfidential Treatnenl RequesÛed BAC -ML-H O O R-502 {X}000945

 From¡ NGDemmo@wlk.com [mailto:NGDemmo@whlccom]
Senù Saturday, December 20,2008 7:06 PM
To: Price, Joe; Moynihan, Brian T
Ccr EDHerlihy@wlrk.com; EMRoth@wlrk.corn; RKim@wlrk.com; MGuest@wlrk.corn
Subject PRMLEGED

Attached are drall talking points. Note that nobody else al VVLRK (incbding Eric Roth) has yet hed e chânce to revisw
these yel. lt probably npkes serpe lo get back on the phone - maybe at B if lhat works for people - to run thlough
comments.

+ + + {. + lt + + + li + + {. + *t ++ +'}'Ì + *t + :} ri + + + + + 1. + + +

Any tax advice contained in this communicalion is not intended or writlen to be used, and cannot be used, for
in promoting, rnarketing or
rhe pìlrpose of avoicling tax penaltes and is not intended to be used or referrecl to

f.ï'*i.'."8îgå1*:l'll?:í:*nfl ÍP;.'i:ff *:i:p.'.T.îli:1ff T*?n';********

Please be advised tlat this transmittal may be a confidential attomey-client communication or may othenvise be
privileged or conJid€ntial. If you are not the intended recipient, please do not read, copy or re-transmit th¡s
cornmunicalion. If you have received this communication in enoç please notify us by e-mail
(helpdesk@wlrk.corn) or by tdephone (call us collect rt2l2-4034357) and delete this message and any
aflachmenls. Thank you in advance for ycnr cooperation and assistance.

www.wlrk.co¡n
***t t(t**t¡(r.r.*t *f *l**rl*tr***¡{t rt*****rltrt(**(rå.f.*trt**l.t l.**t¡*f.l.r.t(*f.**tt*******¡l

llJ
D¡twe wont lo Ect ¡nlo thit le|l ctlttctail vith HP?

Gonfidentia I Treatment Reguested BAC -ML-H OG R-502 -00000946

 From: NGDemmo@wlrk-com
Sent: Sunrlay, l)ecemher 21,2OO8 I :37 AM (GMT)
To: joe.price@bankofamerica-com; RKim@wlrkcom;
brian.t.m oynihan@,b ankofamerica. com
Cc: EDHerlihy@wlrk.com; EMRoth@.wlrk.com; MGuesr@wlrk.com; PCHein@.wlrk.corn
Subject: RE: PNMLEGED
Attach: 13300?ó 2.DOC:Redtine.rtf

Glean and marked versions of the rerrised talking poinls are attached. I didnï add anything other lhan MAC - in the earler
conversation, il didn'l sound like we had any reaþ great sound biles on this front- ll might also dilule our tnessage on the
MAC and the fact that Merrill has become a dsþ assel.

F ro m : Pr ice, loe [ma ]to :joe. price @ban lofamerica.coml

i

Scntr Saturday, Decernber 2Q 2008 8:21 PM

To: lçm, Richard K.; Demmo, Nicholas G.; Moynihan, Brian T. (Bank of America Corporation)
Cc: Herlihy, Edward D.; Roth, Eric M.; Guest, Matthew M,; Hein, Peter C.
Subject RE: PRIVILEGED

Should we inlerject a concept broader than jusl a MAC (in addition lo Rlchard's cornmenl) - more around
MAC/misre presentatim/et a!....

From: RKim@wlrk.com lnnilb: RKim@wlrk.com]

Sent: Saturday, December 20, 2008 8:19 PM
To: Price, Joe; NGDernmo@wlrk.com; Moynihan, Brian T
Cc: EDHerllhy@wlrk.com; EMRothOwlrk.corn; MGuest@wlrk.com; PCHein@wlrk.com
Subjcct RE: PRIVILEGED

l would revise the third bullet to say:

I . . We are still of the view that there has been a MAC at Mcrrill - and e very day their numbers get
û'orse. More fundamentally, acquiring Menill in ils current state could do lrernendous darnage to BAC.
However, we undersland your concerns and are comrnitted to working together to find a u'ay to move
lbnward with the acquisiúon without destabilizing our franchise.
)
J.

I think we need to try fbcus the regulators' attention on lhe lact that acquiring lvfenill would be unsafe and
unsound and away from whether a MAC has occurred. Much more difficult for them to counter.

Richn¡dK. Kim
Wachtell, Lipton, Rosen & Katz
212-403-1354

From: Price, loe lmai]to:joe.prÈe@banbfamerica.coml

Seft: Saturday, December 20, 2008 8:06 PM
To; Dernmo, Nicholas G.; Moynihan, Brian T. (Bank cf America Corporation)
Cc: Herlihy, Edr¡rard D.; Roth, Eric M.; Kim, Rhhard K.; Guest, Matthew M.; Hein, PeEr C.
Subject RE: PRIVILEGED

He needs to understand the exposures are differentthan Citi and the number is 1f)ish when indudirB derivates and

Gonfidentiat Trcatment Requested BAC -ML-H O G R-502-æ000947

 synthel¡cs - olherwise,lhat rnakes sense lo me

F rom ¡ ì,lGDenìrno @ì{ lk.ærn [m a ¡ lto : NG Dem mo@w lßcom]

Seft: Saturda¿ December 20, 2008 7:44 PM
To: Price, Joe; MoyniÞn, Brian T
Cc: EDHerlihy@wlrk.com; EMRoth@wtrk,com; RKim@wlrk.com; MGuest@wlrk.com; PC|-þin@wlrk.com
Subjecü RE: PRIVILEGED

Brian had a good suggeslion, which was to cut back lhe detail for Ken/Hank discussion purposes. I was gcing.to kiJl the
existing langìrage anlreplace wilh " The ring-fencing would be st¡uctured simihrly to the Citi stuclure. except lhat the
pool wóuld Þe approximalely $80 to $100 billion. This would help BAG creaÞ statili$ and conf¡dsnca that the M€rill
iesults seen in the fourth quarler wouH not be repeated." Maybe we should say that lhe pool would "have an
approximate notional amount of $80-1il)'?

From: hhe, loe lmaiho:joe.price@bankofameric¿.com]

Scnt¡ Saturday, Decernber 20, 2008 7:36 PM
To; Dernmo, Nicholas G.; Moynihan, Brian T. (Bank of America Corporation)
Cc: Herlihy, Edward D.; Roth, Eric M.; Kim, Richard K.; Guest, Matthew M.
Subjecü RE: PRIVILEGED

Nick,

See below

1. l.
5. 2. o Thering-fcncingwouldbesimilartotheCiri strucfure,exceptihat
6. 3.
synrhetic assets nnd derivative exposure. The exposures are different ûat Citi's given the dift'erent
types of troubled businesses at Menill. Foe Price] wi ll provide the assel deta¡ls to the 1'ed and to
Your team;
7. 4.
including the derivative and synthetic notions of 70 billion - note that this excludes lhe oorporate
credit lending facilities and potential countetparty ris we are still working through];
8. 5.
sharing lg}l% of the losses after that point, up to a maximum of $[J. The remainder w'ould be
u
funded by the Fed wilh a non-recourse loan, subject to a [ 0]% loss sharing by BAC
9. 6.
Llo/o dividend rate, split between the Treasury and the FDIC as you deterrnine.

10. '7. I think you have lo let him know we are talking something other tharr accrual based assets -
w'hich *as a lot of Citi's number
lt. 8.
12. 9. Plus
t3. lo.
14, I L Just say reduce dividend without the other ilems abor¡t keeping itthere.

From: NGDemmo@wlk.orn [ma i lto:NG Demmo@whk.comJ

Senù Saturday, December20,200E 7:06 PM
To: Price, Joe; Moynihan, Brian T
Cc: EDHerlihy@wlrk.com; EMRoth@wld<,com; RKim@wlrk.com; MGuest@wlrk.corn
Subject: PRMLEGED

Gonf idential Treaünent Requested BAC -ML-H O O R-502 {X}0009f8

 Attached arc drafi tal<ing points. Note that nobody ebe at WLRK (inctrding Eric Roth) has yet had a chance to review
lhese yet. ll probably nnkes ser¡se to get back on tñe phone - maybe at I if lhat works for people - to run through
commenls-

***** *. *'t ** ***** * * * ***** ++ *!¡ **** ***t *+***{<*t +**** +**9r}*** ***** **** **!È*r}
Any tax advice contained in this communication is not intended or written to be used, and cannot be used, for
the purpose ol'avoiding tax penalties and is not intended to be used or referred to in promoting, marketing or
recornmending a partnership or other ent¡ty, inl'eslment plan or arrangementl
***** É ** ******* **r ***** **** *******¡3 **È*t**rt *t**** **t****** *** * *** * *,t *t
Please be advised that this transrnittal may be a confidential attomey-client communication or may otherwise be
privileged or confidential. Tfyou are not the intended recipient, please do not read, copy or re-transrnil this
ãornmunication. If you have received this communication in enor, please notify us by e-mail
(hetpdesk(@wlrk.corn) or by tdephone (catl us collect at2l2-4034357) and deleþ this message and any
aflachmenls. Thank you in advance for your cooperation and asssta¡æ,

www.wlrk.cun
++¡t+*+++++++++t+*r**++++++**+**+++,t++à++++¡l{++++ir(++++++l+++t**+*+**¡}¡}

UJ
- I)o ve v'ant to gel ¡t to thß level of detøil vith H P?

Gonf identia I Treatment Requested BAC-ML-HO G R-502{10000949

 PRTVTLEGED AND CONFIDENTIAL
ATTORNEY WORK PRODUCT
WLR&K DRAt'-l': 12120/08

KI"/EIP Discussion

I'm sorry to call so [late/early], but I wanted to touch base-

I know thæ there are a lot of people a1 the Treasury and Fed working hard this weekend, and
we very much appreciate tlis.

Our peo,ple have likewise been working hard. We are still of the view that there has been a
UAC aftøerrill - and wery day their numbers gøt worse. Acquiring Merrill undcr these cir-
curnstances could do tremendous damage to BAC, Horvever, we understand your concems
abour Menill and arc ctrmlniued to working logdher to fi¡ld a way to lnove fìrrwald with tlre
acqu isition wit hout destabi I i zi ng our franchi se.

While $illpreliminary, our suggestion is that we dotwo things- First, we work togetherto
ring-fence õertain Merrill Lynch assets Second, the government injects an amoì¡nl.of capital
intõ Merrill or the combined company equal to the firurth quarter Mertill operating loss (cur-
rently estinated to be about $13 billion). This would be in addition to the previously com-
mitted $lO billion in TARP preferred. This combination would help BAC creale stabilily and
conFdence to counteract the impact oFthe dramatic across-the-board decline at Merrill.

The ring-fencing would be structured similarly to the Citi structure, except tba! $e.pool
w-ould consist ola broader group of aesets given the different types of troubled businesses at
Merrill, and would be sizefaround $ I50 billio4 including derivative and synthetic posi-
tions. Joe Prioe and his team have been providing information on the asset dda¡ls to the l'ed
and to your team;

ln addition, even though this is a Menill problem, ü-e are prepared to comrnit lo reduc.e our
cornmon stock dividend lo a ñve centsiquarter and keep it at that level as long as r¡'e have
TARP preferred stock omstanding

[We will also engage in a renewed.lop-to-bottorn review ofMerrill management

a¡d take
appropriate staffing action based on that review- ÍNote that u,¿'re leaving oul ary; exeailive
comp distu.xsion since Menill hcts ttbuatþ ttken its lxttttt,v actitttts, and ve ckn't *'anl lo in-
chtde a comm¡tmerìt to rednec BA(l bonays (etwn f lhey me already goittg to be zero) .sittæ
that v'ould maúe lhis look lilcc aBAC ralher tløn aMerrill isxrc,J

Finally, it goes without saying that a very substantial purchase price reduction to the Merrill
stockúolders would be higîly-app.opriate. However, rr€ think it would be better for the sYs
tem if we closed on l/l rather than wait the couple of months or so that it w'ould take to go
back to the stockholders.

Assrming that s¡melhing aklng thcsc lincs qruld r¡rrrk for brtth thc gtlvcrnrnent and BAC.
we would olearly haye lo work quiokly to get everything dooumenled in lime. Tn addition,
lhis proposal does r¿ise a number of queslions, inclurling the process for moving forward
given the number of parties involved, whether Treasury still has TARP funds available to
cornmit to this concept, and if not how we could revise the approach to fit the facts.

Gonf identia I Tre¿tner¡t Requested BAC -ML-H O G R-502 {10000950

 PRIVILEGED AND C ONFIDENTIAL
ATTORNEY WORK PRODUCT
WLR&K DRAb-l': 12/20/08

KUHPDiscussion

¡ I'm sorry to call so [late/early], but I wanted to touch base.

. I know that there are a lot of people at the Treasury and Fed working hard this weekend, and we
very much appreciate this.

. Our people have likewise been working hard. We a¡e still of the view that there has been a

MACaiMerrill-andwerydaythcirnunlbcrsgGtworSe.@is
we thirfr tlmlwe nrfty be-able te nlove ferrvard if we enn-do sonrethilE Énts&t least provides
Acquiring
Merrill under these circumstances could do tremendnts damage to BAC. However. we

r Whìle still prelirninary, our suggestion is that we do two things- First. we work together to
" ring-fence certain Menill Lynch assels

" qovernnenl iniects an amo capital @ Merrillprlle¡Ornblncd

cornpany equal to the fourth quarter

decline at Merrill.

¡ The rinFfeneint weuld be sirni*ar to the €hi strueture; exæPt that

he-asset
' pool would
llo¡f acrefr], f"orrsist of a broader group of assets given the different ti¡pes of troubled
¡uSnesses at tvterrttl
svnlhelic Dositions. Joe Pric
the asset details lo the Fed and 1o your tearn;
ì;'-eur et¡nmt thinking is that the tetftl beekvalue efthe assets weuld be sêmewhere
¿reun+SEI
Þ B^G v'-euld take the first$r I eÊresses; with a eembinatien ef Treasury and the FÐlG
shartng{90f96 ôf Ée to
weuld be furded by the Fed with +nen reeeurse leaÊ suÞieetsle a [10]9'o lgss-sharing
biLBAê+;
)-hr eensideratien ef{his arrangenent; BltG weuld issue $r I e@
F l% d;vidend rt[e;
o In additio4 even though this is a Merrill problem, we åre pnepared to comrnit to reduce our
conrrnon stock dividend to a pennyfivc¡cnEr'quarter and keep it at that level as long as we have

Gonfidential Treatment Requested BAC-ML-HO GR-502 {Ð000951

 TÀRP prefeffd stock outstanding3

e will also engage in a renew'ed, top-to-bottom review

ofMerrill management and take appropriato staffing action based on that reviev. [Nole lhal

actions, a¡ulwe don'l'w'anl to ilrclude a comnilme.nt to re.duce BAC bonuses (etvn iÍtheJ are

¡i'Jz¡s.ì

Finally, it goes withoul saying that a very substantial purchase price reduction to the Menilt
stockholders would be highly appropriate. However, u'ethink it would be better forthe systern
if we closed on l/1 rather than wait the couple of months or so that lt would take to go back to
the sloc,kholders.

Assuming that something along these lines could *'ork for both the govemrnent and BAC, we
would clearly have to work quickly to get everything docurnented in time. In addítion, this
proposal does raise a number ofquéstions, including rhe process for moving forward given the
nurnber ofparties involved, whether Treazury still has TARP funds available to commit to this
concept, and if not howwe could revise the approactr to tìt the fbcts.

ffie

Gonfidentia I Treatr¡ent Requested BAC-ML-HOGR-502{10000952

 NÐvqÐber43r¡008

BAC -ML-HOG R-502{þ000953

Gonf identia I TreaÛner¡t Reguested
 Document comparison done by Workshare DeltaMew on Saturday, December 2O,2OO8

://NYD I MANAGE 1 iWLRK/1 330076/1

://NYD I MANAG E 1 /WLR K1 330076/2

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Deleted cell

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Gonfidential Trcatmenl Reguested BAC-ML-HOO R-5(¡2{0000954