What did they know and when? That was the question investors were asking today of Bank of America after it laid bare the disastrous state of Merrill Lynch's finances.

At the time of the Merrill Lynch takeover in September, as Lehman Brothers was collapsing round the corner, BoA chief executive Kenneth Lewis said he would not need any Government assistance.

“It looks good,” he said, calming fears that he had been rushed into the deal by the White House and US Treasury without studying the books.

When shareholders voted on 5 December to approve the deal, there was still no news of the giant losses announced today. Nor was there a hint of the problems before the deal closed on New Year's Day.

Shareholders say if they knew then what they know now they would never have agreed. So it is crucial BoA says it learned of the losses after that vote. It claims market conditions deteriorated after the vote leading to the $15.31 billion loss. Lewis even sent lawyers to New York to find out whether BoA could cancel the deal.

In mid-December, Lewis told Federal Reserve chairman Ben Bernanke BoA was struggling to digest Merrill's losses, which he described as “monstrous”, so Bernanke and Treasury Secretary Hank Paulson cooked up the bailout.

A downbeat Lewis today said: “We did the right thing for the country.” Shareholders will be hoping he didn't sacrifice the bank in the process.