Submitted by Edward Harrison of the site Credit Writedowns.
The drama at Bank of America continues with Ken Lewis testifying before Congress today. Most of the events surround claims by Lewis that he was coerced into doing the Merrill deal by Hank Paulson and Ben Bernanke. I chronicled these events when they were made public back in April.
- BofA CEO confirms government coerced him into Merrill deal
- BofA CEO Lewis investigated by SEC
- BofA saga continues as John Thain calls Lewis a liar
- Bof A’s MAC clause was as porous as swiss cheese
Just yesterday, it was revealed that Fed officials called Lewis “reckless” in internal e-mails. The Republican party is running with this and looking to make trouble for Bernanke and the Fed. Given the fact that Bernanke is up for re-appointment, these events could have a material impact on the Obama Administration’s desire to keep him on. The last two Fed Chairmen, Greenspan and Volcker were appointed by a President of one party, but subsequently kept on by the next President of another party. If Bernanke goes, we could expect Larry Summers to be a top candidate for the Fed Chairman role.
As for Lewis, he argues that the Countrywide and Merrill acquisitions were in the country’s and in Bank of America’s best interest. Below is the video of Lewis on Capitol Hill making his opening statements before Congress.
My take here is that the Bank of America case has become very political – and that means the blame game is going to be played. Someone — Bernanke, Lewis, Thain or Paulson — is going to take the fall. The knives are out.
Lewis, Fed Face Anger on Hill – WSJ.com