WATCH: Bernanke Vs. Issa

Ben Bernanke spent the morning on Capitol Hill getting grilled by the House, and it wasn't pretty.

The issue was Bernanke's role in orchestrating Bank of America's acquisition of Merrill Lynch last year. Rep. Darrell Issa issued a report on Wednesday saying that Bernanke covered up the role he played in the "shotgun wedding."

According to Issa, Bernanke threatened BofA CEO Lewis and the company's board with firing if they invoked the so-called material adverse change clause, or MAC, to wiggle out of the deal. Because Merrill Lynch's finances were increasingly deteriorating in the months that BofA was negotiating the deal, BofA might have used the clause say there was a material change with the company, and so call off the acquisition.

The Fed worried that nullifying the deal would have posed a systemic risk on Wall Street, similar to the huge collapse of Lehman Brothers. But Bernanke wholeheartedly denied pressuring BofA's Lewis or the board to go through with the deal.

But Issa pulled out a supposed smoking gun. In December, the President of the Federal Reserve Bank of Richmond, Virginia, Jeffrey Lacker, summarized a conversation he had with Bernanke over the issue:

"Just had a long talk with Ben (Bernanke). Says that they think the MAC threat is irrelevant because it's not credible. Also intends to make it even more clear that if they play that card and they need assistance, management is gone."

It implies a threat, says Issa.

WATCH The heated exchange between Bernanke and Issa:

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Comments

[argyle]

Silly. Of course Lewis was told that he better play ball or else. Good, blood was in the water, the sharks were circling and somebody had to take one for the team. Mixed metaphors aside, BofA bought Merrill to save the investment banking system from being systematically dismantled by the market.

[cbates]

So what was the point of Issa's questions to Mr. Bernanke in the fashion that is shown in the tape? Was he trying to say that the circumstances were so fluid and turbulent that he or anyone would have put pressure on B of A to purchase ML as the email was interpreted to represent by Mr. Issa? In the final analysis the brouhaha around Mr. Issa's concern was more about Mr. Issa getting face time on camera than it was about any potential wrong doing on the Federal Reserves part. It is amazing that the media allows these folks to play the way they do. Well I guess the media has a payroll to meet and money to make so they hype stories.
Yet I'm amused that they would not make known the fact that Sanford was having an affair 5 months ago when the supporting evidence was handed to them. The same holds true for Ensign. The media was contacted with supporting information and would not report the story. Man the course of history could have been changed if these folks would do their jobs.

[nomorefed]

good articles for slow news days: http://www.bit.ly/12NCJR

If the truth were being reported we'd be having riots in the streets. And meanwhile the top execs in banks and brokeragesa that caused such a mess are STILL employed and making millions while laying off THOUSANDS of people that actually do work. If you know anyone in banking that's still employed, odds are they are doing the work of three people so the top execs can show 'savings' and contineu collecting mega-incomes. http://www.bit.ly/12NCJR

[outnow]

Rep. Issa believes that he is an attorney. He never learned how to ask a question of a witness. Instead, Issa makes a speech about what a great guy Issa is to make it look like Issa himself is innocent of giving Wall Street the green light by deregulation, instead of taxpayer money in the form of bailouts. The record is clear that Issa is as much of an economic offender as Bernanke, just in a different way.

Why doesn't Issa just ask why we are giving Wall Street a free ride on the backs of taxpayers. Issa is also against restricting executive bonuses to executives whose employer ( banks ) are being bailed out, for example, and favors more tax breaks for the wealthy corporations who support him.

Issa also helped to bankroll Arnold the governator who is bankrupting California.

[nomorefed]

good articles: http://investmintideas.blogspot.com/ recommended

Goldman and Bank of America run the markets along with Geithner, and beagle boy Ben. There
is no free markets, only welfare capitalism and socialism for capitalism.

[BigBagel]

I watched the testimony. Bernanke was involved in a battle of wits with unarmed men.

[sonofsamphm1c]

Nicely put.

Issa Moran.

[JScott]

So Darrel where were you on this when GWB was in office......oh yeah ABSENT and clueless.

[nomorefed]

Obama has no intention of installing meaningful controls. He's just giving bankers full

control. Replace Obama at the next opportunity.

he's right: http://makeitbrief.com/avupq why aren't our voices being heard by Washington?

bernanke is a beagle

[zizyphus]

I listened to the whole thing. Bernanke states a couple of times that his concern is the global economy. So, the actions the FED takes, first are to address global concerns, meaning the interests of bankers and globalists. The FED and the financial sector are bringing down the American economy as surely as if they had nuked it from afar.

The folly is having the FED in control of our money creation. They no longer reveal the M3, the report that tells how much money they are actually printing. But since banks can create "money" out of thin air by simply writing a loan, what we need is a national people's bank that will create money to grow our economy on the path of sustainability.

We can pay unemployed people to plant trees, pull weeds, develop municipal compost systems, integrate biochar technologies into municipal waste programs, to clean up toxic areas, reduce invasive species, and many other projects to support the land and the people, plus rebuilding our infrastructure.

[mamacat]

Whenever I find that California Representative Issa is involved in something, my fraud radar immediately turns on. This is the same guy who helped bring down the California government, by singlehandedly financing the recall of the Democratic governor, whose only 'guilt' was in trying to balance the budget by raising the car tax on luxury vehicles. It also helped that the citizenry were given another chance to vote for a charismatic Hollywood actor.

The Dem. Governor got recalled, the luxury car tax got repealed, and our State's deficit has grown like crazy, under the Republican governor.

[vagabondvet]

Your state's deficit has grown like crazy because of an unprecedented growth in spending, not because of taxes.

[PhilipTaylor]

On April 29, a former top Federal Reserve official told The Wall Street Journal that by offering $30 billion in financing to JPMorgan for Bear’s assets, the Fed had “eliminated forever the possibility [that it] could serve as an honest broker.” Vincent Reinhart, formerly the Fed’s director of monetary affairs and the secretary of its policy-making panel, said the Fed’s bailout of Bear Stearns would come to be viewed as the “worst policy mistake in a generation.” He noted that there were other viable options, such as looking for other suitors or removing some assets from Bear’s portfolio, which had not been pursued by the Federal Reserve.

http://www.webofdebt.com/articles/banking-bailout.php

Thanks CarolAB!

[nunzia]

As soon as I saw Issa's face, the credibility level dropped many points.

[dukeitout]

The article says "Rep. Darrell Issa issued a report on Wednesday saying that Bernanke covered up the role he played in the "shotgun wedding." " First I don't think Issa accused Bernanke of a cover up and forcing a "Shotgun wedding." Secondly, If Rep. Issa did use such incendiary words he sure wasn't able to prove today that a shotgun wedding or threats from the chairman occurred. Bernanke handled himself very well and if it was a sporting event the won/loss record would be Bernanke 1 and the U.S. Reps 0 (nada). The B of A chairman (Lewis) essentially claims he was forced to buy Merrill under duress. Understand that if Lewis succumbed to duress he was wrong agreeing to something that was not in the best interests of the company; and if there was no duress he was still wrong because buying Merrill only assured a much less healthier B of A. The next step by Congress would be to summon Paulson for the same grilling to see if he threatened the very misguided Lewis. Lewis is clearly one of those at fault in this whole mess.

[vagabondvet]

Bernanke suffered from spontaneous elective memory loss.

You do realize that Lewis' job was threatened if he went to the investors. It was a no-win situation for BoA. But you did bring up an interesting point; why would an already insolvent commercial bank voluntarily merge with an insolvent investment bank?

[dukeitout]

B of A wasn't insolvent prior to the merger as you indicate. They may have become insolvent with the merger.

[mmz]

Is Issa long-winded or not. No class. Bernanke is right on with the immediacy of the crisis.

[vagabondvet]

All Bernanke/Paulson/Geithner sycophants love to forget that every single time that the macroeconomic policies that are being followed now have been followed in the past, it has led to hyperinflation and the destruction of monetary systems.

[jerrypl]

Bernanke's word is meaningless. We need a grand jury investigation of this possible criminal action by the Chairman of the Federal Reserve Bank.

http://eye-on-washington.blogspot.com

[kauthon]

Back in my day, when someone saved the financial industry. You say thank you and walk away.

[mmz]

I agree with "kauthon."

[dnpvd51]

How is sending hundreds of billions (trillions) of dollars in good money to a bunch of thieves saving anything?