Bernanke to Congress: I Am Not a Bully
Testifying on Capitol Hill today, Federal Reserve Chairman Ben Bernanke told a House committee that he didn't put the screws to Bank of America executives in order to force them to acquire Merrill Lynch.
That deal wound up costing taxpayers $20 million, and Bank of America CEO Kenneth Lewis stated that the Treasury Secretary at the time, Henry Paulson, and other federal regulators threatened his job after he expressed doubts about the deal. Bernanke told the committee that he was not involved in any such intimidation.
Bernanke also denied that he or any other member of the Fed had instructed BoA to cover up information about Merrill's deep financial troubles, arguing that failing to disclose that information would have violated the executives' fiduciary duty to the company's shareholders.
In addition, Bernanke defended the deal as necessary to avoid a complete meltdown of the financial system at a time when Lehman Brothers had just collapsed and lending was essentially frozen.
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