Bernanke's a Bully and Ken Lewis Is a Weenie

It's painful to watch the continuing circus act in Washington. Moronic lawmakers once again can deflect any personal complicity in the financial crisis by beating up on the schlub of the day. Today that prize goes to our Federal Reserve Chairman, Ben Bernanke, or as I like to call him, "BB".

The House Committee on Oversight and Government Reform brought BB before them under the guise of questioning him about the shotgun marriage between Bank of America and Merrill Lynch. Yesterday, California congressman Darrell Issa, the senior Republican on the committee, said the Fed "engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies." COVER UP--them's fighting words!

The allegations stem from a December 21, 2008 email between Federal Reserve Bank of Richmond President Jeffrey Lacker and other Fed employees. In it, Lacker notes that Bernanke planned to tell Bank of America that "management is gone" if it bowed out of the Merrill deal and later needed more government money.

This seems totally believable, doesn't it? Go back to that time and remember that the financial system had just barely avoided total collapse. The last thing the government needed was another Lehman-like failure. I could imagine a scene where BB stared down Bank of America CEO Ken Lewis and basically said, "Hey Ken--you know that you wanted this deal. You were dying to stick to the New York investment community and so you snatched one of its prized possessions--the "Thundering Herd" of Merrill Lynch. Don't tell me know that you don't want to do it. If you are so worried, just know that Uncle Sam will not be here for you if things go sour."

Let's assume that BB and then-Treasury Secretary Henry Paulson acted like big bullies and let's also assume that Lewis had real concerns about doing the Merrill deal: Why didn't Lewis have the guts to go to his shareholders and lose his job? Isn't that what fiduciary duty means--to put the interest of your shareholders before your own interests? In other words, lawmakers may have grilled the wrong wiener today.

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Comments

[William1950]

so do we re-live the french revolution and storm the bastile?? is that our option here? cause the nimrods we have in congress and the senate whatever their stripes, are not doing the job for us... they are vying for position and looking ahead to the nest election... that is all they care about, getting reelected,

[joebaggadonuts]

Bank Of America has it's largest operations in Darrel's home state.

[William1950]

ponzi schemes are illegal, paramid schemes are illegal. (however paramid is spelled)..
Wall street has evolved into the biggest scheme to steal money, to invent money and then spend it, to "rake it in" .
The working class and the poor of the entire world have been manipulated and lied to and stolen from for so long, this is but the latest method and won't be the last.
In a just world, the prepetrators of this would spend the rest of their lives in jail, but in this world they get yet more of our money from the government who is ostensibily looking out for the little guy, it's all B.S. ..
It really makes me mush more inclined to believe some of the conspiricy theories... if your not a Rothschild, or a Rockefeller, your out of luck and will be taken for a ride... get used to it.

[joebaggadonuts]

What happened to getting mad and getting even?

[William1950]

shrug..... we are too lazy and too "engaged" in you tube and our crackberries to get involved... we get mad and cry in our beer.

[grateful4thedead]

interesting and valid approach on this article.

firstly, lewis should have invoked MAC clause and gone to the shareholders.

I can see your postulation about lewis not wanting to lose his job, but there is a legitimate question on the flip side, i.e. did lewis believe that invoking MAC might lead to a collapse of the system? I don't know but it is a legitimate alternative.

the big question i have is why is hank p. not being grilled?

the obamas need to do better than this and their guy geithner was in on this movie all along.

[tailgateshirts]

Yeah Michelle needs to get after them!

[Jill Schlesinger - Huffpost Blogger]

I think that it is legitimate to consider that Lewis could have feared that invoking MAC could have truly damaged the system. I would like to believe that was his motivation, but I wonder how the shareholders of BAC feel about it too.

Agreed about HP--why the free pass, while BB is whacked around!

[sabredance]

And it seems the shareholders have let their fury be known too, for Lewis failing to consult....

[jhNY]

"Remember that the financial system had just barely avoided total collapse." So says the author, a financial reporter whose reporting on the global meltdown of finance, like most offered up by the journalists toiling under that tattered banner, was mostly after-the-fact and even now, retains a gossipy, insiderish tone about the doings of the great personages who populate her beat, as if it all came down to a war of personality cults.


Yet the financial system is presently a pack of tottering zombies, dragging themselves from bailout to bailout, with a couple timely mergers of the biggest of the bailed on the side.

And even if I agreed with the author that the 'system' did not totally collapse, I never would have employed the passive voice to describe what happened: the US Treasury, thanks to the feverish activities of luminaries from both parties and from all over Goldman Sachs, became the guarantor for the staggering losses generated throughout the financial sector, and the citizenry were thus left holding a bottomless bag of debt.

[EinChicago]

"Yet the financial system is presently a pack of tottering zombies"

Yaaaaaaaaaaawwwwwwwwnnnn.

Oh, sorry, I kept hearing the same broken record repeating the same inaccurate nonsense like it was March over and over again.

[Jill Schlesinger - Huffpost Blogger]

OK, I get your point that the taxpayers are left holding the bag. But while it was not a war of personalities, there were obviously strong human beings in the room when all of this was going down. Each of them brought his or her own experience to the table and influenced the outcome. the case of Ken Lewis is a prime example--as the financial crisis was reaching its zenith, he chose to acquire Merrill Lynch (at a premium, no less!)