I don’t buy it either:
Bernanke denied threatening to oust Bank of America’s CEO Kenneth Lewis or the bank’s board members if they abandoned the takeover after discovering spiraling losses at Merrill.
“I never said that I would replace the board and management” if Lewis decided to invoke a clause in the acquisition contract to try to stop the deal, Bernanke told the committee….
Throughout the day, Bernanke faced often hostile questioning — unusual for a Fed chairman, who typically commands deference in public settings. Of Bernanke’s denial that he threatened Lewis’ job, Rep. Jason Chaffetz, R-Utah, said: “With all due respect, I’m just not buying that.”
The Merrill deal made no sense for BofA and they had a perfect out. What reason does Lewis have to lie about it? This is hardly the first time there’s been talk about Paulson and Bernanke putting the squeeze on the banking executives to do as they’re told. It’s really a tremendous accomplishment, when you think about it, that Bernanke can actually make the CEO of a monster bank look sympathetic, and in the present environment, no less! All we need now is the dreaded vote of confidence from Obama and we’ll know that Summers is the chairman-in-waiting.
Some interesting documents regarding the Fed’s discussion of the merger. Page 18 in the PDF document is of particular interest.