Oct. 19 (Bloomberg) -- Bank of America Corp. signed off on its government-assisted purchase of Merrill Lynch & Co. after U.S. regulators assured the deal should boost the shares, e- mails from two bank finance executives showed. Instead, the shares collapsed.

“The chairman of the Federal Reserve indicated it would be structured in a manner such that BAC stock should go up when announced,” Chief Financial Officer Joe Price said in a Dec. 29 e-mail to top executives of the Charlotte, North Carolina-based bank, including Chief Executive Officer Kenneth D. Lewis.

The e-mail was among more than 1,000 pages of documents sent last week to the House Oversight Committee. Bloomberg News was provided a portion of what the committee received in its investigation of the Merrill acquisition. A hearing is scheduled Oct. 22 at which two Bank of America directors and former General Counsel Timothy Mayopoulos are to appear.

By Jan. 8, a week after the Merrill purchase was completed and a week before details were disclosed, federal officials took a different view of the transaction, according to an e-mail from former Bank of America Treasurer Jeff Brown.

Fed and Office of the Comptroller of the Currency officials “assign high probability the market will ‘attack us’ after learning of the ‘government assistance’ to us,” Brown said in a Jan. 8 e-mail to Price. Brown reminded the regulators that “1) they forced us into this position and 2) they had provided every assurance of a positive market response to any action from their chairman to our chairman. They just got silent.”

Bank of America spokesman Lawrence Di Rita declined to comment on the e-mails. Michelle Smith, a Fed spokeswoman, didn’t have a comment.

Lewis Testimony

Lewis told Congress June 11 that Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson pressed him to complete the deal in December after the bank had considered canceling the transaction amid mounting losses at the world’s largest brokerage firm.

Bank of America shares tumbled 47 percent in six trading days, from $13.54 on Jan. 8 to $7.18 on Jan. 16 when the Charlotte, North Carolina-based company announced its first quarterly loss in 17 years and an additional $20 billion in U.S. aid to absorb potential Merrill losses. The bank also disclosed that Merrill posted a $15.8 billion fourth-quarter loss, leading to questions about Lewis’s failure to alert shareholders before the transaction was approved.

Bank of America provided documents to the committee Oct. 16 after agreeing last week to forego its right to keep discussions with its lawyers confidential. The bank didn’t make the documents public.

Lewis, 62, said this month he plans to resign at the end of the year and a six-member committee is seeking his replacement. Finance executives Brian Moynihan and Gregory Curl are internal candidates considered leading contenders to succeed Lewis, according to a person familiar with the matter. The bank also has named Price as a potential successor. Brown left the bank and works for GMAC Inc.

Shareholders stripped Lewis of his chairman’s title in April, and regulators directed the bank in May to overhaul its board and risk management.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: October 19, 2009 19:46 EDT