Was there a cover-up at the Federal Reserve?
Congressman Darrell Issa (R-CA) claims to have evidence supporting Ken Lewis’ original contention that he as threatened by government officials for contemplating pulling out of the BofA-Merrill deal. Let’s review. Two weeks ago, Lewis pointed the finger at Paulson and Bernanke in testimony before Congress (see my post). This came after claims of government coercion that Lewis made in a he said-she said drama between Lewis and John Thain, the former head of Merrill Lynch. Clearly, someone is lying and this drama has become a political football. Translation: a scapegoat will be found – justifiably or not.
So, now we have Issa going after the Fed after Obama presents his banking reform package asking to increase Federal Reserve power. The narrative against the Fed reads as follows: first these guys were asleep at the wheel on regulation, allowing a mortgage bubble to spin out of control. Then, they recklessly lower interest rates, encouraging speculation and making the bubble that much larger. Now, we see the Fed strong-arming banks in a desperate attempt to clean up the mess they made. And, they are covering it up to boot. Do you want these people to have more power?
This argument is coming to a TV screen near you very soon – and most of it is justified.
Below is the clip of Issa making his case that the Federal Reserve coerce Lewis and is now covering it up (By the way, I should point out that this doesn’t get Ken Lewis off the hook for potentially dis regarding his fiduciary responsibilities).
About Edward Harrison
- The Federal Reserve bails out AIG 16 Sep 2008
- Application for the Federal Bail Out Program, 2008-2009 2 Dec 2008