Material Adverse Change
I spend quite a bit of time listening and helping companies fight over the definition of "Material Adverse Change" or "Material Adverse Effect" that would allow them to get out of a deal they've agreed to do.
Once the definition is agreed upon, and the deal is signed, there's no room left to argue.
It would appear that the CEO of Bank of America did not understand that concept. Or, rather, he refused to listen to his lawyer when his lawyer explained that he could not call the MAC and kill the merger with Merrill Lynch.
When his lawyer explained that the losses of Merrill Lynch were insufficient reason to call the MAC -- he fired his lawyer. He then told the Feds he intended to kill the deal unless he got bailout money for Bank of America.
In my first year of law school, my property professor said something that I think is a very important rule for lawyers to remember:
If someone has to go to jail, it should be the client.
It's hard, when you are a service provider, to provide services your clients don't want. Particularly when they have to power to fire you.
At the time, Bank of America's former counsel was probably very frustrated with the conflict between doing the right thing and keeping his job. But now that there's a federal investigation, I'm guessing he is even more glad that he did the right thing.