Why is this man smiling? This morning's revelations that BoA CEO Ken Lewis was literally cajoled into buying Merrill Lynch is truly amazing. The Wall Street Journal has a more interesting take than does the New York Times (no surprise there).
Of course, the investigation led by Rep. Edolphus Towns (D., N.Y.), chairman of the House Committee on Oversight & Government Reform, puts it in another light. In this morning's committee meeting's opening remarks, Towns indicates that he believes that Ken Lewis cravenly used the unanticipated $12 billion in losses at Merrill as a "bargaining chip" (actually, Fed chief Bernanke and others at the Fed said this in emails) to obtain Federal funds.
Towns said this a.m.: "In short, the Treasury Department had provided a $20 billion dowry for a shotgun wedding. But the question may be, Who was holding the shotgun?" Clever line, but I am going with Lewis. He feared shareholder lawsuits for going ahead with a deal that would so badly impair BoA itself. So, be prepared for political grandstanding about using taxpayers' money for a private deal when the real story is: What role does the Fed, the Treasury and the gub'ment in general have in a private economic transaction? For Towns' remarks, Lewis' prepared testimony and Fed emails, go to the Committee on Oversight's website.