SAN FRANCISCO (MarketWatch) -- The government threatened to oust Bank of America Chief Executive Ken Lewis if the bank didn't go through with its acquisition of struggling investment bank Merrill Lynch, according to the results of an investigation by New York Attorney General Andrew Cuomo released Thursday.

Hank Paulson, Treasury secretary at the time, told Lewis in December that the management and board of directors of Bank of America BAC, +1.15% would be removed if the deal wasn't closed, Cuomo said in a letter summarizing his findings to regulators and legislators.

Paulson told Cuomo's office that he made the threat at the request of Federal Reserve Chairman Ben Bernanke, according to Cuomo's letter. Read the full letter here.

Federal regulators also warned Lewis that a meltdown of the financial system could be triggered if the deal fell through.

This and other facts unearthed by the probe raise questions about the transparency of the government's Troubled Asset Relief Program, as well as corporate governance and disclosure practices at Bank of America, Cuomo wrote.

Cuomo's findings show how aggressive the Treasury and the Fed have been in trying to stabilize the financial system in the face of the worst credit crisis and recession for decades.

Paulson told Lewis that if Bank of America pulled out of the Merrill deal, that would create "systemic risk," Cuomo said in the letter. Systemic risk usually refers to a damaging domino effect in which the collapse of a major financial institution leads to more failures.

The revelations may also put Lewis in a more precarious position. Bank of America's annual meeting is on April 29 and some shareholders have been calling for Lewis to step down.

CtW Investment Group, which helps union pension funds be more active investors, is calling for Bank of America shareholders to vote against Lewis, lead director O. Temple Sloan and governance committee chair Thomas Ryan at the meeting.

CtW said Thursday that Cuomo's findings suggest Lewis went ahead with the Merrill deal to protect his job, rather than because it was in the best interests of Bank of America investors.

"Mr. Lewis and the board owe their fiduciary obligation to the corporation and its shareholders, not to the regulators who reportedly pressed them to close the deal," CtW said in a statement. "He and his board violated their legal duties to shareholders in order to protect their own employment interests."

Bank of America spokesman Scott Silvestri said the company believes it "acted legally and appropriately with regard to the Merrill Lynch transaction."

Bank of America's directors stressed in a Dec. 22 meeting that they weren't "persuaded or influenced" by the government's threat to oust management and the board, according to minutes of the meeting disclosed by Cuomo.

However, Cuomo said that Lewis admitted that Paulson's threat "changed his mind" about pulling out of the Merrill deal.

With so much riding on the Merrill acquisition and the government so deeply involved, Lewis and Bank of America had to consider more than just the short-term interests of investors.

Lewis also weighed "serious concerns" about the health of the U.S. financial system and the damage that a broad collapse might do to Bank of America when deciding to go through with the Merrill deal, according to minutes of a Dec. 30 board meeting that were released by Cuomo.

Disclosure

Bank of America agreed to buy Merrill on Sept. 15, in the midst of the financial crisis, and shareholders approved the deal on Dec. 5. Soon after that, Merrill finalized billions of dollars in bonuses, according to Cuomo's letter.

Merrill's losses then began mounting quickly and ended up reaching roughly $15 billion in the fourth quarter -- $7 billion more than was projected before Bank of America shareholders voted on the acquisition and Merrill set its bonuses, Cuomo recounted.

"These additional losses, some of which had become known to Bank of America executives prior to the merger vote, were not disclosed to shareholders until mid-January 2009, two weeks after the merger had closed," Cuomo wrote.