Bernanke gets rough ride over BoA 'threats'
Friday 26 June 2009
The Federal Reserve chairman, Ben Bernanke, has denied – over and over again, under a barrage of hostile questions – ever threatening to oust Ken Lewis as head of Bank of America when he was considering pulling out of the deal to buy Merrill Lynch.
While the central bank boss usually travels to Capitol Hill to dispense economic wisdom, Mr Bernanke was yesterday grilled by lawmakers who are concerned about what they see as an over-mighty and out-of-control Fed.
At issue were the events of last December, when BoA was considering trying to get out of its acquisition of Merrill because of spiralling losses at the investment bank. At stake now are plans to give the Fed more power to regulate systemically important financial firms, and even Mr Bernanke's reappointment for a second term when his first runs out next January.
Mr Lewis told the New York attorney general, Andrew Cuomo, this year that Mr Bernanke and the then Treasury Secretary, Hank Paulson, said he and the board could be ousted if they tried to pull out of the Merrill acquisition. However, in testimony before the House oversight committee this month, Mr Lewis characterised the understanding that his job was at risk as "pressure" rather than a "threat".
Taking his turn before the committee yesterday, Mr Bernanke said repeatedly that he did not make any threat to oust Mr Lewis, and did not ask Mr Paulson to do so either – but he added that one of his arguments was that walking away from Merrill would damage management's credibility.
The Fed has the power to request management changes at banks, and has demanded that BoA hire a better cadre of non-executive directors with banking industry experience. Given that the Fed clearly had that power, asked Republican Jason Chaffetz, "how is that not a threat?"
peopleContenders for Time magazine's Person of the Year are a mixture of the good, the bad and the holy
newsAs the world remembers Mandela the hero, the prison where he spent 27 years seems all the more brutal
tvSteven Moffat reveals the actor was dying to take on the role of the Time Lord and says he is excited to see what he will do with the character
sportBayern Munich 2 Manchester City 3: City come from two down to beat reigning European Champions
arts + ents... and a chance to paint Booker Prize winning author Hilary Mantel
danceUnder Tamara Rojo's inspired direction, it seems possible that it could challenge the dominance of the Royal Ballet. We meet some established names and rising stars
travelDiscover Uruguay's jet-set beach resort, an Atlantic enclave with plenty of art and culture to explore on the side
The ten coldest places on Earth
Sir Ian McKellen hits back at Damian Lewis' 'fruity actor' claims
Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
Krokodil in Mexico? Teenager hospitalised after 'injecting drug into her genitals'
Nelson Mandela memorial: Cheers, jeers and a masterclass from Barack Obama that stole the show
- 1 Mountain goats' miraculous escape from avalanche captured in dramatic video footage
- 2 It’s shameful that our universities have accepted gender segregation under pressure from the most oppressive religious fanatics
- 3 Sir Ian McKellen hits back at Damian Lewis' 'fruity actor' claims
- 4 Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
- 5 Selfie at funeral: Cameron squeezes in on Obama snap at Mandela memorial
- < Previous
- Next >
iJobs Money & Business
£70000 - £90000 per annum + benefits + bonus: Pro-Recruitment Group: Our leadi...
£50000 - £65000 per annum + BONUS + BENEFITS: Harrington Starr: A leading mark...
£60000 - £85000 per annum + BONUS + BENEFITS: Harrington Starr: A leading asse...
£45000 - £70000 per annum + Bonus + Benefits: Harrington Starr: Technical Impl...