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"We think [Ben] Bernanke overstepped and used his position to push the deal," Issa said in an interview on CNBC. "There is something wrong with interfering with a business doing a normal due diligence and not informing their shareholders." Issa said Congress will explore the allegations in further detail during upcoming hearings. Indeed, Fed Chairman Bernanke is scheduled to testify Thursday before the committee about allegations from Bank of America chief executive Kenneth Lewis that government officials pressured him to buy Merrill after he became aware of major losses at the investment bank. Bank of America closed its acquisition of Merrill Lynch on Jan. 1, after the government agreed to a $138 billion aid package to help BofA complete it. Bernanke responded in a statement to Congress obtained by CNBC that the Fed acted with the "highest integrity" and denied exerting any undue pressure in the deal. But according to The Washington Post, this e-mail exchange Issa's committee obtained via subpoena -- in which two Fed Reserve employees discuss withholding information from the Office of the Comptroller of the Currency, or OCC -- could be "the smoking gun." Quoting from a Republican committee staff memo obtained by the WaPo: "Even the OCC, Bank of America's direct regulator, was kept in the dark by Federal Reserve employees when it came to the Fed's negotiations with Ken Lewis over the MAC clause. In one exchange, Fed employees refer to an upcoming conference call in which they express their interest in withholding Bank of America's negotiations with the government over the MAC: 'Given the presence of the OCC on the call, I think we should not discuss or reference the call with Ken Lewis and Paulson,' wrote one. The reply came: 'Agree. Also not the MAC* discussion.' " *MAC: Material adverse change, a clause written into merger contracts that gives one party the opportunity to try to pull out if previously undisclosed, harmful facts are uncovered. Lewis considered trying the MAC -- a legal challenge, that you can win or lose -- when he saw how Merrill's losses were mounting in December. - Donna Block See story from The Washington Post
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The Federal Reserve sought to "cover up" its extensive involvement and concerns about Bank of America Corp.'s (NYSE:BAC) deal to purchase Merrill Lynch & Co. as the latter's financial condition worsened, said Rep. Darrell Issa, a Southern California Republican and the ranking minority member on the House Committee on Oversight and Government Reform.
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"Quoting from a Republican committee staff memo"
Sorry, but that is hardly "proof" of anything.
I can't help but wonder whether this allegation is some form of "swift-boating" being used to throw a roadblock in front of economic recovery so as to provide a Republican campaign-slogan for 2010.