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

[BabblingBrooks]

"Analysts Say Home Loans Will Soon Be Hard to Get With Bad Credit"--headline, KSL-TV/FM/AM Web site (Salt Lake City), June 23

Just asking, but shouldn't home loans always be hard to get with bad credit? Isn't the current problem to a great extent caused by making it too easy for people with shaky credit to get home loans?

Well, not if Barney Frank has his way! He wants people with bad credit to get home loans!

[zizyphus]

The idea was to generate as many loans as possible, the bad and the good, and make as much money as possible kiting the paper before the ponzi scam blew up.

Then get taxpayer dollars, party, and collect bonuses, and watch while the economy disintegrates and all the property goes back to the banks, just like in Monopoly.

[BurtonOerney]

Yes! Then those evil banks own a whlole lot of worthless property! Genius!

[research]

Banks like secrecy, since modern banking is LITERALLY a CONFIDENCE SCAM.

Put the FED under control of the Treasury, See my profile for more.

[ntmessage]

Bernanke was simply doing his job, and competently no less. A notion completely foreign to the GOP along with the likes of Issa and banking executives under the Bush administration. In fact, the Bush SEC used to ask the industry if it was being too hard on them! Yes, that happened! Some think that Lewis and Mozilo must have something on Issa for him to go out on such a limb. We expect Lewis to do anything to save his butt. But Issa? In fact, Lewis wanted Merrill all his life and then played hardball with the MAC threat, in an attempt to shakedown the Fed during a real crisis. He even asked Bernanke for a letter stating something that Bernanke did not say so Lewis could cover his butt! Was this type of behavior was SOP during the Bush administration? How could Lewis have this expectation of Bernanke or anyone else protecting the taxpayer that this type of misfeasance would actually fly? The Pubs cannot get right on a regulator doing his job so they smear a good man. Think what you want of the notion of the Fed as an institution, but Bernanke saved the system from complete collapse. Now we have cowardly armchair lawyers posing as the people’s representatives dissecting every statement, email and perception. Issa is doing the bidding of Lewis trying to save his hide. Both must go.

[Rule Of Law]

"Bernanke was simply doing his job..."

Sure. And the check is in the mail from his bosses at Goldman Sachs!

[ntmessage]

Of course he was. Silly.

[climatebabes]

Irrelevant point. The question is not to who and how, the question is why? Fire Bernanke!

[sonofsamphm1c]

He's not going to be fired.

What kind of person would advocate firing the falsely accused?

[zizyphus]

Another Senator also quizzed Bernanke about the comments made by the others, by repeatedly asking him, "Was so and so lying when he said..." Then it appears that it is Bernanke who is lying.

Obama is set to expand the FED's powers at a point in time when it should be abundantly clear to all that the FED does not have the best interests of the American people at heart. Only the interests of the bankers.

It was a mistake to give them the power to control our currency, and now through their poor decisions and criminal lack of oversight, they have driven our economy to it's knees.

[sonofsamphm1c]

It was a mistake to allow conservatives to control the economy.

[zizyphus]

Right, but the problem is exacerbated by the fact that most of the Democrats are conservative now.

[plaidsportcoat]

Could we please get rid of Darell Issa??????­??????????­??????????­?????/
Target him, his district, get him a girlfriend, etc.

[ntmessage]

Issa and Lewis must go and the SEC needs to investigate them along with Mozilo.

[ejhickey]

What is wrong with Issa? If Bernake is lying or covering up something, we should know about it and maybe Bernake has to go. Same with Lewis. 5 am glad both Issa and Kucinich are pursuing both of these guys.

What also makes me suspcious of Bernake is that CNBC is closing ranks behind him including Kudlow. About two weeks ago Kudlow was al over Uncle Ben and now Kudlow has change his tune.

[mamacat]

His district in California is one that is so heavily Republican that the only way he could get voted out of office would be if he appeared to be too moderate and reasonable durig the primary election. Today's Republican Party will eat any of their own who appear to be weak on right-wing rhetoric.

[Rule Of Law]

Anyone who doesn't see this for the finely honed bit of Kabuki theater that it is, needs more help than they can get here. As Shakespeare said--The Play is the thing...

[Onandon]

There is nothing left to discuss with this man or any of these criminals.
Arrest Ben Bernanke,
Arrest Tim Geithner
Arrest Hank Paulson
Arrest Alan Greenspan
Arrest Chris Cox
Arrest Sheila Baird
Arrest All of these Scumbags.

There is no point talking about anything other than the arrest of the Federal reserve board and all its principles. THATS IT!
The crimes that these people are engaged in are the largest in history.

[plaidsportcoat]

Just arrest Bush and Cheney, they were in CHARGE of it all.

[smchp]

Bernake under Dubya.....­."He's great"
Bernake under Obama...."­He's pure evil"

Stay classy GOP!

[mamacat]

We no longer have to pay attention to their rants and raves. The GOP has been discredited so many times that they have pretty much lost all credibility.

[ntmessage]

Bernanke was simply doing his job, competently. A notion completely foreign to Pubs and the likes of Issa and banking executives under the Bush administration. In fact, the Bush SEC used to ask the industry if it was being too hard on them! Yes, that happened! Some think that Lewis and Mozilo must have something on Issa for him to get out on such a limb. We expect Lewis to do anything to save his butt. But Issa? In fact Lewis wanted Merrill all his life and then played hard ball with the MAC, threat attempting to shakedown the Fed. He even asked Bernanke for a letter stating something that Bernanke did not say so Lewis could cover his ass! Was this type of behind the scenes behavior that went on during the Bush/Issa/Sec troika? How could Lewis even have the expectation that Bernanke or anyone else working for the people to put up with such egregious misfeasance and probable malfeasance much less actually agree? What the Pubs cannot get right on is a regulator getting tough with Wall Street, and now they want to smear a good man. Think what you want of the notion of the Fed as an institution, but Bernanke saved the system from complete collapse and now we have cowardly arm chair lawyers posing as the peoples representative dissecting every statement, email and perception. Akin to smearing a heroic fireman who saved the house because the hose blocked the sidewalk.

Lewis must go.

[BrickSykes]

Issa is such a Dee-Eye-See-Kay that I don't know how he's stayed alive this long. Hopefully the good folks in San Diego will decide to reel him in next election. We surely need a break from this guy...

Brick

[plaidsportcoat]

soon SD Mexican Americans will move on up and kickemout

[djsquared]

please explain your comment

peace,
djsquared

[breakingpoint]

Audit the FED!

House HR 1207 - Federal Reserve Sunshine Act of 2009
Senate S. 604 - Federal Reserve Transparency Act of 2009
http://jischinger.wordpress.com/2009/06/24/s-604-federal-reserve-sunshine-act-of-2009

[spiritpony1]

added thought------it would make sense that Issa is "supporting" Lewis------more ways than one------classic Rep. supporting a dog like Lewis-------wonder HOW much $$$$ support Issa has gotten from B. of A., blah blah over years-------------

[plaidsportcoat]

only millions.

[BurtonOerney]

Isn't this exactly what the majority of HP posters want him to do? Merrill Lynch was extremely poorly run, so Bernanke liquidated it, selling it to BoA for next to nothing. Because Merrill Lynch was such a big player, Bernanke threatened management jobs if they made a fuss about it.

Darrell Issa is a hero though. He's a San Diego Republican who had attacked plaintiffs' testimony as inauthentic in the Blackwater hearings, doesn't believe global warming is a big deal, complained publicly about federal money going to nine11 victims. supported the Patriot Act and its reauthorization. He's really looking out for the little guy.

[spiritpony1]

sorry, Issa is NOT hero------guess you meant to say is NOT a hero------or you're being ironic----I just don't want Issa to get any kudos for his b.s. posturing --he's a fraud

[jboswel2]

Burton was being sarcastic.

[nomorefed]

Seems to me that Lewis is trying to save his butt here and that Bernanke is a convenient scape-goat that he can turn on, and that he has asked Issa to do his dirty work for him. Bernanke never threatened anyone from what I can tell.

What it seems Ben did was state the truth, that if Lewis used the MAC clause, and his bank also needed government help, the board of Bank of America would boot Lewis because it would leave BAC without a government safety net. What Ben was doing was predicting the future for his other Fed members who apparently were not seeing what was happening. The memo was vague.

agree good articles: http://investmintideas.blogspot.com/ different perspective