The circumstances surrounding Bank of America’s takeover of Merrill Lynch have caused a public dispute involving the bank’s chief executive, Ken Lewis, and top management past and present, according to media reports.

The furore began when Andrew Cuomo,

New York attorney general, released documents raising new questions over Mr Lewis’ failure to tell investors about huge losses at Merrill before completing the acquisition.

BoA's takeover of Merrill Lynch has created one of the world's biggest wealth management businesses. Reports on the latest controversy did not say whether it will have a direct impact on the ability of BoA to develop its wealth management business. 

Mr Cuomo said Mr Lewis told his officials that he was forced to complete the deal after then-Treasury secretary Hank Paulson – citing fears about systemic risk – threatened to have him and his board fired if they pulled out, reports said. 

In a letter to congressional leaders and the Securities and Exchange Commission, Mr Cuomo quoted the BoA chief as testifying under oath that Mr Paulson told him “we feel so strongly that we would remove the board and management” of BoA if it tried to renege on the deal.

Mr Cuomo said Mr Paulson had told investigators in an interview that he had made the threat “at the request” of Ben Bernanke, chairman of the Federal Reserve.

But the former Treasury chief denied that he said this. A spokeswoman for Mr Paulson said: “Secretary Paulson’s words were his own. Chairman Bernanke did not instruct him to indicate any specific action the Fed might take.”

Later, Mr Paulson clarified his comments, saying his “prediction of what could happen to Lewis and the board was his language, but based on what he knew to be the Fed’s strong opposition to Bank of America attempting to renounce the deal.”

Meanwhile, both Mr Bernanke and Mr Paulson insisted that they had not advised Mr Lewis to conceal Merrill’s mounting losses from his shareholders.

“Questions of BoA’s disclosures were left up to Bank of America,” Mr Paulson’s spokeswoman said. The Fed said: “No one at the Federal Reserve advised Ken Lewis or Bank of America on any questions of disclosure. It has long been the Federal Reserve’s view that questions of this nature are best addressed by individual institutions and their legal counsel.”

Mr Cuomo said in his letter that Mr Bernanke refused to give a deposition to his inquiry, citing bank examiner privilege.

The decision by Mr Cuomo to disclose sensitive details less than a week before BoA’s annual shareholder meeting could galvanise opposition against Mr Lewis and the board.

“This is a symptom of their mismanagement of the entire process,” said Jon Finger, whose family owns 1.5 million BoA shares.

“Bank of America is the only financial institution to get itself into this kind of mess with an acquisition.”

According to minutes from its 22 December meeting, the BoA board agreed to proceed with the Merrill deal after Mr Paulson and Mr Bernanke pledged to provide financial assistance, which eventually totalled $20 billion. The minutes also say the board “was not persuaded or influenced” by the threat of removal.