Bernanke Suffers From Selective Memory Loss
by ilene - June 26th, 2009 12:41 pm
Courtesy of Mish
Bernanke Suffers From Selective Memory Loss; Paulson Calls Bank of America "Turd in the Punchbowl"
Fed chairman Ben Bernanke’s memory seems to be failing at an amazingly convenient time, for Bernanke. Please consider Bernanke Blasted in House.
Federal Reserve Chairman Ben Bernanke faced open hostility from lawmakers who barraged him during a Congressional hearing over his handling of the financial crisis and the central bank’s role in reshaping the banking system.
Setting aside the deferential tone usually reserved for Fed chairmen, members of the House Committee on Oversight and Government Reform repeatedly interrupted Mr. Bernanke at Thursday’s hearing to review the Fed’s role in engineering a government aid package for Bank of America Corp. The lawmakers pored over internal Fed emails subpoenaed by the committee and projected on a screen in the hearing room.
Much of the heat focused on the Fed’s part in pushing Bank of America to complete its acquisition of Merrill Lynch in January. House members on both sides grilled Mr. Bernanke on whether he threatened to force out Bank of America Chief Executive Kenneth Lewis. They accused him of inconsistencies in his statements and of keeping information from other agencies.
The biggest point of contention was over whether Mr. Bernanke threatened to oust Bank of America CEO Mr. Lewis. Bank of America approached top U.S. officials in mid-December about abandoning its deal to buy Merrill Lynch.
Mr. Bernanke defended the Fed’s actions, saying the central bank acted with the "highest integrity" in the negotiations with Bank of America. "I did not tell Bank of America’s management that the Federal Reserve would take action against the board or management," Mr. Bernanke said, adding that the decisions were "taken under highly unusual circumstances in the face of grave threats to our financial system and our economy."
Lawmakers pointed to a Dec. 20 email written by Richmond Fed President Jeffrey Lacker. One of a series unearthed by the panel, the email recounts a conversation between Messrs. Lacker and Bernanke in which the Fed chief planned to tell Bank of America that "management is gone," if they quashed the deal and later needed more government aid, wrote Mr. Lacker.
Pressed on the issue, Mr. Bernanke said he didn’t make such a comment to Mr. Lewis and didn’t remember that part of the conversation with Mr. Lacker.
Rep. Dan Burton, (R., Ind.), a