According to several news reports released Friday, Bank of America CEO, Ken Lewis, became concerned about going forward with the Merrill brokerage acquisition shortly after the deal was approved by shareholders on December 5, 2008. Mr. Lewis met with Federal Reserve Chairman, Ben Bernanke, and Treasury Secretary, Hank Paulson, on December 17, 2008 and according to the Wall Street Journal told them that he had concerns about closing the deal because Merrill's losses were "monstrous" and he was considering canceling the deal invoking a material change clause or repricing the deal to reflect the lower value of the company.
According to Mr. Lewis, both Fed Chairman Bernanke and Treasury Secretary Paulson told him that he needed to close the deal as is and failing to do so would have negative systemic consequences on the fragile banking system. Both government officials provided assurances that they would provide backstop funds to help Bank of America.
One thing that Bernanke and Paulson couldn't provide was assurances to the shareholders, you know, the people that CEO, Ken Lewis, is supposed to represent? This backroom deal didn't include the interests of the shareholders as they watched their stock plunge over 30% Thursday and Friday alone. Now comes the slew of lawsuits, investigations, and finger pointing. Of course this is exactly what Hank Paulson knew was going to happen explaining why his original plan for the $700 billion-dollar "Friends of Hank Bailout Plan" had provisions in it that his actions were not subject to review, criticism, or criminal prosecution. A government sanctioned Godfather so to speak. It appears that now our banking system and stock market have become nothing more than one giant Ponzi scheme. The only difference between Bernanke and Paulson and Bernard Madoff is that Mr. Madoff''s scheme was limited to the clients he could con and undetected by regulators and Mssrs. Bernanke and Paulson's actions are ripping off all Americans with the approval of regulators!
The fraud, corruption, and cavalier attitude by the same people who got us in this mess continues. It's time to say no more! If my money is going anywhere I want it to go to creating jobs repairing our country's infrastructure, creating our energy independence, and protecting our natural resources, that is, tangible assets that we can see, touch, and use.
President-elect Obama, throw out the bums and take no prisoners!
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