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The Question Ken Lewis Never Gets Asked

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US lawmakers accused the Treasury and Federal Reserve on Thursday of using threats and intimidation to force Bank of America CEO Ken Lewis to take over Merrill Lynch last year.
Republicans accused Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson of "putting a gun to the head" of Lewis to close the deal.

Bernanke and Paulson, meanwhile, will be asked to testify at a later date before the House Oversight and Government Reform Committee.

Democratic Representative Elijah Cummings noted Lewis had told his board the Fed and Treasury would remove the board and management of the bank if it did not complete the purchase of Merrill Lynch despite growing losses there.

"If that isn't a threat, I don't know what is," Cummings said.

After watching this morning’s Congressional hearings on what role the Fed and Treasury played in getting Bank of America to stick with its deal to acquire Merrill Lynch, the elected representatives failed yet again to ask the question I have never had fully answered:

Why did Bank of America agree to pay .859 of a share, roughly $50 billion worth of its stock and a big premium to Merrill’s then stock price on Sunday September 14th, when it was clear to virtually anyone who was paying attention that Merrill’s stock price was about to collapse when trading began that Monday morning?

Source: The Faber Report

Watch the testimony here: http://video.nytimes.com/video/2009/06/11/business/1194840852654/kenneth-d-lewis-on-merrill-purchase.html

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