Archive for Friday, June 26, 2009

Bernanke faces heat on bank deal

June 26, 2009

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— Facing an unusual political trial, Federal Reserve Chairman Ben Bernanke disputed accusations Thursday that he pressured Bank of America to acquire Merrill Lynch in a deal that cost taxpayers $20 billion.

In a three-hour hearing of the House Oversight and Government Reform Committee, 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.

It was Bernanke’s first public response since the committee launched an investigation into whether he or other government officials bullied Bank of America to stick with its plan to combine the two financial powers.

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