U.S. Federal Reserve Chairman Ben Bernanke said on June 25 he didn't threaten Bank of America to acquire Merrill Lynch in a deal that cost taxpayers 20 billion U.S. dollars.
U.S. Federal Reserve Chairman Ben Bernanke addresses the HOPE Global Financial Literacy Summit at a community center in Washington June 17, 2009.
"I did not tell Bank of America's management that the Federal Reserve would take action against the board or management if they decided to invoke a clause in the acquisition contract in an attempt to stop the deal," Bernanke testified before the House Oversight and Government Reform Committee.
It marked Bernanke's first public comments since Congress launched an investigation this year into whether he or other government officials bullied Bank of America to stick with its plan to combine the two financial powers after Kenneth Lewis, former BoA CEO learned of Merrill's financial woes.
Lewis said earlier that he was reluctant to go through with the deal because Merrill was in a tough financial situation, but the government was against it. According to local media, Bernanke oncehinted that Lewis and other high-ranking executives would be ousted from the bank if they did not accept the deal.
Bernanke said no member of the Fed urged Bank of America to keep quiet about Merrill Lynch's financial problems.
The deal that BoA took over Merrill was part of a series of big deals led by the government after the breakout of the financial crisis last year. BoA was in trouble after Merrill disclosed it was in heavy loss. The role that the U.S. government played in the deal was controversial.
