Bernanke to Testify on Bank Of America-Merrill Lynch Deal
Fed Chairman Ben Bernanke will testify before the House Oversight Committee next Thursday, June 25, to answer questions on whether he twisted the arm of Bank of America chief executive Ken Lewis and forced him to go through with his bank's purchase of troubled brokerage Merrill Lynch, even as he was getting cold feet.
Lewis has twice testified -- before the Oversight Committee and earlier before the New York attorney general -- that Bernanke told him that he and B of A's board would would be removed if he didn't complete the Merrill deal.
The federal government ended up giving B of A $10 billion to help it swallow Merrill, part of the bank's $52.5 billion taxpayer bailout.
Bernanke was worried about broad damage to the financial system if Lewis backed away from Merrill, as he watched the brokerage's mounting losses in December, when the deal was heading toward conclusion.
Bernanke said earlier that he did not overstep his authority in talks with Lewis over the deal. But the Oversight Committee, citing numerous Fed and B of A e-mails during a hearing last week, said then-Treasury Secretary Hank Paulson and Bernanke "put a gun to the head of Bank of America’s CEO and Board of Directors in order to force through a merger with Merrill Lynch."
So next week, the committee -- which is being led by its Republicans on this investigation -- will get to ask Bernanke some questions point-blank.
June 17, 2009; 10:30 AM ET
Categories: The Ticker | Tags: Bank of America, Ben Bernanke, Federal Reserve, Hank Paulson, Ken Lewis
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