Congress has subpoenaed the Federal Reserve, to force it to hand over documents about its role in Bank of America’s takeover of Merrill Lynch during the financial crisis last fall, reports Reuters.
Staffers for the House Oversight committee, chaired by Rep. Ed Towns of New York, had been allowed to view the documents at the Fed. But Towns has now concluded that the committee needs to have the documents in its possession. The Fed has said it will comply with the subpoena.
According to Reuters, the list of documents Towns is demanding includes the handwritten notes from a December meeting between Fed chief Ben Bernanke, BofA CEO Ken Lewis and others.
Bush Treasury Secretary Henry Paulson and Fed chief Ben Bernanke reportedly warned BofA CEO Ken Lewis that if his firm pulled out, Merrill would collapse. They added that such a move, in the Journal’s words “could undercut confidence in Bank of America, both in the markets and among government officials.”
But that was just the start. Two days later, on a conference call, Bernanke told BofA that if it abandoned the Merrill deal, and came back to the Feds in the future seeking more bailout money, the government would consider removing the firm’s executives and directors.
Lewis has said the government pressured him to withhold from investors information about Merrill’s losses, but Bernanke has disputed this.
Looks like the committee will now get to see for itself.