Rep. Edolphus Towns

I commend Rep. Edolphus Towns (D-NY), Chairman of the House Committee on Oversight and Government Reform. Rep. Town’s closing statement at yesterday’s Congressional hearing culminated some riveting theatre. That said, this is not a one act play. Rep. Towns highlights the need to dig deeper in exposing what truly happened in the midst of the Bank of America takeover of Merrill Lynch. Towns finished the hearing with this Closing Statement:

At the outset of this hearing, I said that it’s time to shine some light on the events surrounding Bank of America’s acquisition of Merrill Lynch.

At this point, I would say we’ve gotten a peek, but we don’t have full sunshine yet.

I would make three observations:

1. There are significant inconsistencies between what we have been told today, what we were told two weeks ago by Ken Lewis, and what the Fed’s internal emails seem to say.

2. It is still unclear whether Bank of America was forced by the Federal government to go through with the Merrill deal, or whether Ken Lewis pulled off what may have been the greatest financial shakedown of all time; and

3. As a result of this hearing, we have learned that the SEC and FDIC played a role in this transaction.

Former Treasury Secretary Hank Paulson has agreed to appear before this Committee in July and I look forward to that hearing.

But we also need to hear from the FDIC and the SEC, so that we can better understand what happened during the dark days of last December.

Will Congress and the Obama administration look to pursue these ‘inconsistencies?’ Will the parties to these conversations collectively be brought together so these inconsistencies can be addressed? Will the American public once again be subjected to an accusation by one party to a conversation claiming the other party misremembered?

In true Joe Friday fashion, Rep. Ed Towns echoes my sentiments:

The immediate reaction to Bernanke’s testimony is less than positive. The Bank of America-Merrill Lynch ‘play’ could very well be a preview to the Fed as the uber-regulator for systemic risk. Sense on Cents strongly believes the Fed should not occupy that role. Why? Throw any concept of an independent Federal Reserve right out the window. Bloomberg addresses this prospect in, Bernanke Grilling May Weaken Case for Expanded Powers:

Bernanke failed to resolve some lawmakers’ questions on whether the Fed bullied executives and stepped over other regulators in the name of financial stability in a three-hour congressional hearing yesterday.

Criticisms by members of both parties are likely to diminish support for the Obama administration’s plan to make the Fed the single agency responsible for the largest and most interconnected financial institutions.

“There’s something rotten in the cotton here — no ifs, ands or buts about it,” Representative Edolphus Towns, a New York Democrat who chairs the House Oversight Committee, told reporters after the hearing. “There was a forced situation, a shotgun wedding” and “we’re just trying to find out who had the shotgun.”

Will it be business as usual in Washington or will the American public truly learn if Ben Bernanke and possibly Hank Paulson abused their powers.

Don’t recall? Misremembered? Just the facts, please!


  • jbjd

    I will contact the Representative, to say, thank you for your public service on your constituents’ behalf. (My Congressman, Barney Frank, obviously could not care less about taking appropriate action in the best interest of his constituents or his country.)

    • Karma

      That is a good idea.

      Thanks LD for all that you do as well. And the cynic in me says business as usual. That the majority of Congress doesn’t have what it takes to give the people the honest answers.

    • Mary Miller

      Five dollars say that Frank and Kerry were in the middle of this deal.

  • jwrjr

    So what will Ozero do to try to get Rep. Towns fired?

  • cathnealon

    Bernanke on the hot seat? Could it be that he’s being thrown under the bus for Summers, a worse snake in the grass than B? With this administration be careful what you ask for you may just get it (and worse).

  • oowawa

    I think Ben Bernanke and the institution he represents will be classified as “too big to fail” and given a pass on everything. Who is going to dare to rock the boat now that we’re in the middle of the ocean, and a storm is coming?

    • NoBamaNoWay

      pretty much.

  • Patience

    I predict business as usual. It’s become quite apparent that effective, impartial regulation and oversight, as well as tranparency, is not a goal of this administration. It’s more into creating an appearance of change and reform.

    This may be enough though to thwart the possibility of the Fed becoming the uber-regulator.