Federal Reserve Board chairman Ben Bernanke spent an extremely tense session Thursday before the House Committee on Oversight and Government Reform answering questions regarding whether he pressured Bank of America to acquire Merrill Lynch last year.
The grilling was led by Rep. Edolphus Towns (D-N.Y.), the Congressional Black Caucus member chairing the committee. Most of the questions, accompanied by several Fed e-mails shown on a monitor in the hearing room, centered on whether Fed officials threatened to remove CEO Kenneth Lewis and his board if Bank of America pulled out of the deal. Bernanke replied repeatedly that he did not threaten or use coercion to ensure that the deal went through.
In a show of solidarity that is rare these days on Capitol Hill, Democrats and Republicans seemed unconvinced by Bernanke’s testimony. Rep. Darrell Issa (D-California), the committee’s ranking member, charged Bernanke with engaging in a cover-up.
In interviews, Towns maintained that “there’s something rotten in the cotton,â€ and may call Bank of America Chairman Ken Lewis, Bush Treasury Secretary Henry Paulson, and FDIC Chair Sheila Bair to testify. He says the answers he gains once the investigation is complete will also determine how he will vote on the Obama administration’s financial market regulation overhaul. He has pledged to hold more hearings throughout the summer.
Here are Towns’ comments from an exclusive interview the lawmaker had with Black Enterprise:
Black Enterprise: Do you believe that the Federal ReserveÂ abused its power inÂ Bank of America’s acquisition of Merrill Lynch?
Rep. Edolphus Towns: I’m concerned about some of the things that we heard. For instance, there seems to have been force, that they were coerced. Bank of America said, “Look, we’re not going to move forward with it. Ken Lewis said the Fed threatened to remove him and his board, which led to him reconsidering. A private deal ended up with $20 billion of taxpayers’ money. I just don’t understand how this happened. We have to talk to the SEC to find out if they were asleep at the switch and what happened here. We need to talk to the FDIC because it was concerned about the deal and reluctant for it to move forward. So there are a lot of unanswered questions. We know there was a shotgun wedding; we’re just having some difficulty figuring out who had the shotgun.