Leaders of the House Oversight and Government Reform Committee have served a subpoena on the privately owned and controlled Federal Reserve to compel officials at the country’s private central bank to turn over key documents in an effort to get to the bottom of what went on when America’s largest bank purchased a bankrupt Wall Street investment firm.

Rep. Dennis Kucinich (D-Ohio), who chairs the Domestic Policy Subcommittee, has been looking into the circumstances surrounding Bank of America’s acquisition of Merrill Lynch and what role government bailout funds may have played in the transaction.

According to a press release issued by committee chairman Edolphus Towns (D-N.Y.) and ranking member Darrell Issa (R-Calif.), the documents subpoenaed include emails, notes of conversations and other critical evidence.

When Bank of America completed its planned acquisition of Merrill Lynch in January 2009 for nearly $30 billion, the megabank was then eligible for an additional $20 billion in a taxpayer bailout. This brought Bank of America’s total bailout to $45 billion.

Kucinich and Towns want to know the exact details behind what the bank and the Federal Reserve had agreed upon when they arranged the deal in late 2008 to see if there were any backroom dealings promising bank executives additional taxpayer money if they rode to the aid of Wall Street.

During testimony before the House committee on June 11, Bank of America CEO Kenneth Lewis denied that access to more federal funds was the reason why Bank of America helped Merrill Lynch. The Treasury Department and the Fed had persuaded the bank to purchase the insolvent Wall Street firm in a selfless act to help Wall Street, he claimed.

“I believe that committed people of good intentions, in both the private sector and the government, worked desperately hard in late 2008 to prevent a collapse of the global financial system that would have resonated
throughout the global economy,” he said.

But Kucinich was not buying it. At the hearing, Kucinich ripped into Lewis, saying Bank of America took the deal in order to grab more taxpayer dollars.

“Due to the secretive and unaccountable conduct of the Fed throughout its interventions addressing the current financial crisis, many questions about the Bank of America-Merrill Lynch deal and bailout have, until today, remained unanswered,” said Kucinich during the hearing. “The story of Bank of America’s merger with Merrill Lynch and its huge taxpayer-provided subsidy help to answer broader questions about how the corporate management of very large financial institutions operates with virtual impunity for their mistakes.”

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(Issue # 26, June 29, 2009)

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