Saturday, May 2, 2009

"I'm from the government, I'm here to help"

The cavalier use of brute government force has become routine, but the emerging story of how Hank Paulson and Ben Bernanke forced CEO Ken Lewis to blow up Bank of America is still shocking. It's a case study in the ways that panicky regulators have so often botched the bailout and made the financial crisis worse.

In the name of containing "systemic risk," our regulators spread it. In order to keep Mr. Lewis quiet, they all but ordered him to deceive his own shareholders. And in the name of restoring financial confidence, they have so mistreated Bank of America that bank executives everywhere have concluded that neither Treasury nor the Federal Reserve can be trusted.

Mr. Lewis has told investigators for New York Attorney General Andrew Cuomo that in December Mr. Paulson threatened him not to cancel a deal to buy Merrill Lynch. BofA had discovered billions of dollars in undisclosed Merrill losses, and Mr. Lewis was considering invoking his rights under a material adverse condition clause to kill the merger. But Washington decided that America's financial system couldn't withstand a Merrill failure, and that BofA had to risk its own solvency to save it. So then-Treasury Secretary Paulson, who says he was acting at the direction of Federal Reserve Chairman Bernanke, told Mr. Lewis that the feds would fire him and his board if they didn't complete the deal. ...

The Wall Street Journal


The title of this post was described by President Ronald Reagan as some of the most frightening words in the English language. Gun owners and dealers have long known that the Federal regulators who oversee them are the enemy; it looks like bankers have now learned the same hard truth.

2 comments:

Vir Speluncae Catholicus said...

This country will reap what it's sown. And unfortunantly, the good will suffer with the evil.

But on the other hand, this is all for a reason. After all, no Carter -- no Reagan.

Arkanabar T'verrick Ilarsadin said...

Aye, it has sown selfishness, greed, and using the government to pick each others' pockets, and it shall reap ruin. And always, the sun has shone and the rain fallen on both the just and the unjust.

And I know you have your eye on Jindal as the next one to lead Americans towards liberty.