Do the ends ever justify the means? Does being well-intended preclude one from committing a criminal act? If our legislative bodies do not possess the heart and courage to ask these difficult questions, can we assume they are implicitly approving them? Oh, what a tangled web trillions of dollars in financial losses will weave.

The intrigue behind the acquisition of Merrill Lynch by Bank of America may never be known. Will Congress pursue total transparency and integrity to compel all pertinent parties to be fully forthcoming? Would Congress go so far as to appoint an independent investigator with powers to subpoena Ben Bernanke, Ken Lewis, John Thain, Hank Paulson, Larry Summers, and Tim Geithner? Does the rule of law apply in our country only when convenient? Bloomberg provides a peek into this intrigue, Republicans Say Fed Set Late Report of Merrill Loss:

House Republican staffers said the Federal Reserve tried to control the timing of disclosures of rising losses at Merrill Lynch & Co. in the weeks leading up to its takeover by Bank of America Corp., according to a memo obtained by Bloomberg.

The memo, prepared by staffers for Republican lawmakers at a House Oversight Committee hearing tomorrow, cites what it identifies as excerpts from internal Fed e-mails to support the conclusion. Fed Chairman Ben S. Bernanke is scheduled to testify at tomorrow’s hearing in Washington.

The e-mails show that the Fed “engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other Federal Regulatory agencies,” Representative Darrell Issa, the panel’s senior Republican, said in an e-mailed statement.

Strong words by Representative Issa.

Cover-up? Who was negatively impacted by not revealing information on losses at Merrill Lynch? Existing Bank of America shareholders, who may very well have voted against this deal.

Hiding details from other Federal regulatory agencies? Such as? The SEC. The OCC. The FDIC, which would assume a significant percentage of losses on assets purchased by Bank of America. How did FDIC chair, Sheila Bair, feel about that prospect?

“Dear Ben, Strong discomfort with this deal at the FDIC, for all the reasons you and I have discussed,” Bair said in a Jan. 14 e-mail, according to the memo. “My board does not want to do this and I don’t think I can convince them to take losses beyond the proportion of assets coming out of the depository institutions.”

Who else was clearly reluctant to finalize this transaction? Bank of America chairman and CEO, Ken Lewis. He testified in February to New York State authorities about being pressured by Bernanke and Paulson. Lewis hedged his statement about Bernanke’s and Paulson’s pressuring him, if not outright threatening him, under questioning by Congress earlier this month.

Will we learn more today from Bernanke or will this chapter close without a full accounting of what truly happened? Will Congress pass the Obama administration’s proposal to make the Federal Reserve the uber-regulator to stem systemic risk? Might shareholder rights be trampled in the process? Do the ends justify the means? Do laws mean anything? Can one be a well-intended crook? So many questions.


  • NomNomNom

    comment eaten by Spaminator.
    Bad Spaminator! Bad!

  • Kbentleyis

    Americans, are you fed up enough with all this bull? Tomorrow, Pelosi is pushing the Cap & Tax legislation through. (She has money invested in a green energy company) LOL!

    Please call congress tomorrow and flood the phones!

    202/225-2131 or 202/224-3121


  • Peggy Sue

    Is Bernanke a well-intended crook?

    The modifer “well-intended” is a loaded phrase in my mind, Larry. We cannot get into Bernanke’s mind and heart. But from where I sit the Fed has gone off the rails.

    The road to Hell is paved in good intentions. And that’s where we’re headed. The Fed as the “uber-regulator?”

    Please! Would I invite a child molester to babysit my children? Possibly, if I were daff or a hopeless naif.

    Call me the cynic. But this decision makes no sense. Unless the current Administration is in the pocket of the bank robbers.

    And where is the outrage? Torches and pitchforks will enter the picture, sooner or later.

  • J

    Bernake, well intended? NOT!

    Is Bernake a ‘crook’? HELL YES, the buggar Bernake belongs in a federal slammer with the key thrown down the toilet so he can never get out!

  • Patience

    I can understand why Bernanke wanted the deal to go through, but if this story is true, it’s much more than just another example of government picking winners and losers. AND if it’s true, could it nullify the deal? My head spins with the possibility of all the lawsuits that could result. Then again, I guess government is immune. Silly me. Who’s left to sue then?

    And earlier this week we had Barney Frank once again wanting to relax Freddie and Fannie regulations.

    I guess when we have a POTUS who breaks a law he co-sponsored regarding dismissal procedures for Inspectors General, we shouldn’t expect anyone else in government to obey laws and play by the rules.

  • allimom99

    There is a bill in the House that has over 200 co-sponsors which would require an outside audit of the Fed. Talk about strange bedfellows – Dennis Kucinich and Ron Paul for example. Support in the Senate is harder, but (surprise surprise) Barney Frank is the one putting on the brakes, as it’s his committee that has jurisdiction. This is the MINIMUM required to clean all the dirt out of the Fed – and yes, giving them further regulatory authority for anything is INSANE!

    • NomNomNom

      The IMF said a year ago it planned to audit the Fed Res: the bill is a smokescreen to forestall action by the IMF. All this new authority and $$ for the Fed Res is one last f#ck you before the IMF replaces/ restructures it: and Paul and Kucinich both sure as sh#t know it.

  • tzada

    OT but about money and our economy

    State Dept Urges “U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year”

    More troubling news afoot. Is US Dept of State Advising Some Embassies To Obtain Year’s Worth of Local Currencies? If so, why? Does it expect a dollar collapse in the next 4-6 months?(hat tip TC)

    “Latest Schultz Shock: a ‘bank holiday’ Commentary: A leading newsletter paints a grim picture of the future” by Peter Brimelow, Jun 24, 2009, 1:35 a.m. EST WSJ Market Watch . com

    In its current issue, HSL reports rumors that “Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that ‘something’ is about to happen … within 180 days, but could be 120-150 days.”

    Yes, yes, it’s paranoid. But paranoids have enemies — and the Crash of 2008 really did happen.

    HSL’s suspicion: “Another FDR-style ‘bank holiday’ of indefinite length, perhaps soon, to let the insiders sort out the bank mess, which (despite their rosy propaganda campaign) is getting more out of their control every day. Insiders want to impose new bank rules. Widespread nationalization could result, already underway. It could also lead to a formal U.S. dollar devaluation, as FDR did by revaluing gold (and then confiscating it).”

  • felizarte

    More power for the Federal Reserve Board???? NO! NO! NO! Dear God NO! The Federal Reserve Board is a private corporation controlled by the people/families that own it. It has successfully allowed itself to be thought of as a govt. agency. It is not, even if the Fed Dhairman is nominated and confirmed by Congress.

    This is the ultimate privatization of the United States of America. Someone should research the names of the stockholders of this agency. I bet those records are not available.

    • Ferd Berfle

      I concur. The regulatory muscle should be applied forcefully in other areas, such as in the Securities and Exchange Commission. The bozos who ruin companies while floating safely to dry ground with their golden parachutes are the ones I’m concerned about and they seem to have all sorts of friends at the Fed.