- College algebra to be removed from Southeast required curriculum (10/10/17)1
- State declares test results for schools invalid (10/4/17)2
- Child-custody advocate: State law needs fix to provide parents with more equal custody (10/12/17)
- Cape Chinese restaurant purchases old Ponderosa property in Perryville (10/10/17)
- One of Cape's oldest mom-and-pop restaurants opens in new location (10/10/17)
- Past Rowdy the Redhawk mascot's identity revealed (10/15/17)
- Cancer will 'change your life, but it doesn't have to rule it' (10/8/17)
- Bills addressing equal child custody to be filed, legislators say (10/13/17)
- Ships to stay docked in Cape a week longer (10/10/17)
- Janet Koenig creates painted quilts to add flair to local barns (10/13/17)
Bernanke to face hostile questioning on Bank of America deal
WASHINGTON -- Federal Reserve Chairman Ben Bernanke likely will face hostile questions from a House committee investigating whether he and other government officials pressured Bank of America Corp. into a "shotgun wedding" with Merrill Lynch that cost taxpayers $20 billion.
The House Oversight and Government Reform Committee has scheduled a hearing Thursday as it probes whether federal officials urged Bank of America CEO Kenneth Lewis to keep quiet last fall about Merrill Lynch's financial problems and stick with the plan to combine the two financial powers.
Not divulging that information would have violated Lewis' fiduciary duty to the bank's shareholders.
Spokesmen for the Fed and former Treasury Secretary Henry Paulson have denied they pressured Lewis to get the deal done and to not disclose his concerns about Merrill's finances.
Earlier this month, Lewis said his job was threatened after he expressed second thoughts about the merger. Lewis said Paulson and federal regulators made clear that if the Charlotte, N.C.-based bank reneged on its promise, that he and the bank's board members would be ousted.
Bank of America received $45 billion from the government's financial bailout program, $20 billion of which was linked to its acquisition of New York-based Merrill Lynch.
The House panel has subpoenaed documents from the Fed.
In one e-mail, Bernanke said he thought Lewis' threat to pull out of the deal was a "bargaining chip," and "we do not see it as a very likely scenario at all."
The government helped orchestrate the deal at a time when the country's economic and financial landscape was especially fragile. Lending, the lifeblood of the economy, had come to a near halt and the financial system was on the brink of a meltdown.
The transaction was hammered out over the same weekend in September that another investment bank, Lehman Brothers, went under, leading to the biggest corporate bankruptcy in U.S. history and plunging financial markets worldwide into crisis. Bank of America completed its purchase of Merrill Lynch on Jan. 1.
Bernanke is likely to defend the deal and government bailout, saying the action was needed to avoid even more problems.
Committee Chairman Rep. Edolphus Towns, D-N.Y., and ranking member Darrell Issa, R-Calif., earlier this month said the panel had reviewed documents that proved the merger was a "shotgun wedding" that came at taxpayers' expense.