Lawmakers accused a senior Bank of America (BoA) executive of lying, in a heating Congressional committee hearing to investigate the bank’s $50 billion acquisition of Merrill Lynch.

Brian Moynihan, the head of BoA’s consumer business and a leading candidate to replace outgoing chief executive, Kenneth Lewis, told the House Oversight Committee that the bank acted in its shareholders’ best interests when it acquired the collapsing Wall Street bank last September.

Mr Moynihan, who was BoA’s general counsel at the time of the takeover, also insisted that the bank’s executives acted in an open and honest manner when dealing with the Treasury and Federal Reserve over the purchase.

But Representative Elijah Cummings told Mr Moynihan that he found his testimony “troubling”.

“I find some of the things you said not believable,” Rep Cummings said.

Dennis Kucinich, chairman of the Domestic Policy Subcomittee, told the hearing that he had obtained an email from a top Fed lawyer to Ben Bernanke, the central bank chairman, that speculated whether BoA might be charged with violating securities laws over the takeover.

Rep Kucinich also revealed embarrassing details about how BoA executives accepted incomplete data from Merrill on its losses and, he claimed, made up an estimate of how much Merrill’s financial situation may worsen.

“This investigation has opened a rare window onto the management suite of the largest bank in the country,” he said. “Bank of America’s top executives allowed guesswork to masquerade as expert knowledge and … numbers pulled out of the air, without any actual analysis, served as the basis for corporate decisions made about other people’s money.”

BoA is being investigated by a number of agencies for omitting to tell its shareholders about huge losses and generous bonus payments made by Merrill in the fraught final quarter of 2008.

The scandal surrounding the $50 billion takeover cost John Thain, Merrill’s former chief executive, his job at the merged company, and forced Mr Lewis to step down as BoA’s chairman and announce his early retirement.

BoA was hailed for propping up the US financial system when it agreed last September to buy Merrill, which was close to collapse. But on December 17 Mr Lewis told the Fed and Treasury that he wanted to back out of the deal, citing unexpected losses at Merrill.

Henry Paulson, then Treasury Secretary, and Ben Bernanke, the Fed chairman, pressured Mr Lewis to go through with the acquisition, with the promise of a $20 billion bailout to help BoA absorb Merrill’s losses.

But BoA did not tell shareholders of the growing red ink at Merrill when it asked them to vote through the acquisition on December 5. Investors were furious when it emerged in January that Merrill had made a $15.8 billion loss in the third quarter, pushing its full-year loss to $27.6 billion.

They accused BoA of hiding or turning a blind eye to Merrill’s fourth-quarter plunge into the red, and of adding insult to injury by allowing the Wall Street bank to rush through the payment of $3.6 billion in 2008 bonuses despite its terrible performance.

Mr Moynihan told the meeting that losses at Merrill changed dramatically in the12 days between the shareholder vote and Mr Lewis’s attempt to halt the deal.

“The facts were different,” he said.

Rep Kucinich said, however, that BoA should have known of the mounting losses in early November. He said that BoA had provided the committee with a forecast created by Merrill on November 12, more than a month into the fourth quarter of 2008.

The forecast showed that in October 2008 Merrill had already made more losses than in the entire third quarter, Rep Kucinich said. Yet the forecast assumed that Merrill’s highest-risk assets, such as sub-prime mortgage-backed securities, would not continue to make losses in the remaining two months of the fourth quarter.

“Bank of America saw the deficiency in this document but they have not shown us that they did any actual analysis to make up for the Merrill omissions,” Rep Kucinich said. “On the contrary, the evidence we have suggests that Bank of America pulled a number out of thin air.”

BoA has claimed in previous hearings that it relied on independent legal advice to decide what disclosures to make to shareholders.

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