Fed helps rig gold market

Fed Concealed Its Hand in Bank of America Deal, Congressman Says

By Julie Vorman and Kim Dixon
Reuters
Wednesday, June 24, 2009

http://www.reuters.com/article/innovationNews/idUSTRE55N4KL20090624

WASHINGTON -- The Federal Reserve sought to hide its extensive involvement in Bank of America Corp.'s acquisition of Merrill Lynch as Merrill's financial condition worsened, the top Republican on the House Oversight and Government Reform Committee said on Wednesday.

"The committee has already learned that Ben Bernanke and the Federal Reserve made inappropriate threats to fire Bank of America management unless they went ahead with the 'shotgun wedding' that was the Merrill Lynch acquisition.

"The Federal Reserve also engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies," Rep. Darrell Issa said in a statement released to Reuters.

The committee has obtained a number of emails and documents from the Fed about its behind-the-scenes role in the merger, which was quickly brokered late in 2008, according to sources familiar with documents.

The Fed, which was wrapping up a two-day meeting on Wednesday, had no immediate comment.

The sources said the documents showed the Fed tried to keep secret information about the Bank of America deal from the Office of Comptroller of the Currency, the North Carolina-based bank's direct regulator, and from the Securities and Exchange Commission, according to the sources, who declined to be identified because they were not authorized to speak publicly on the matter.

That behavior "raises important questions" about whether the Fed can work collaboratively with other regulators and should gain additional power, as proposed in the Obama administration's financial regulation plan, the sources said.

Bernanke was scheduled to testify about the Bank of America deal at a committee hearing on Thursday.