New York Attorney General Andrew Cuomo has released a letter with accompanying addenda that he sent to key Washington officials. In it he says that Henry Paulson essentially corroborated Ken Lewis’s testimony concerning the acquisition of Merrill Lynch. Paulson also testified that the threats made to Lewis concerning his replacement should the Merrill deal not be completed were done at the request of Fed Chairman Ben Bernanke.

In an interview with this Office, Secretary Paulson [argely corroborated Lewis’s account. On the issue of terminating management and the Board, Secretary Paulson indicated that he told Lewis that if Bank of America were to back out of the Merrill Lynch deal, the government either could or would remove the Board and management. Secretary Paulson told Lewis a series of concerns, including that Bank of America’s invocation of the MAC would create systemic risk and that Bank of America did not have a legal basis to invoke the MAC (though Secretary Paulson’s basis for the opinion was e,ntirely based on what he was told by Federal Reserve officials).

Secretary Paulson’s threat swayed Lewis. According to Secretary Paulson, after he stated that the management and the Board could be removed, Lewis replied, “that makes it simple. Let’s deescalate.” Lewis admits that Secretary Paulson’s threat changed his mind about invoking that MAC clause and terminating the deal.

Secretary Paulson has informed us that he made the threat at the request of Chairman Bernanke. After the threat, the conversation between Secretary Paulson and Lewis turned to receiving additional government assistance in light of the staggering Merrill Lynch losses.

Earlier today there were reports on CNBC that Bernanke denied the accounts.

I’m not going to editorialize right now. I need to think this through. 

One thought, though. Is there any way at this juncture that Ken Lewis is still the CEO of BofA by the end of this week? 

more: here (Cuomo’s letter and related material) and here (last nights post on the subject)