Fuggeddaboudit!

The story of the strong-arming of Bank of America CEO Ken Lewis by Fed Chairman Bernanke and former Treasury Secretary Paulson is quite disturbing. Apparently, Mr. Lewis and his time at Bank of America realized in Decemeber that the losses on toxic assets aT Merrill Lynch far exceeded what was expected. Although Mr. Lewis and his team could be blamed for not doing the best job of due dilligence, once the true extent of Merrill's toxic assets were known, efforts were made to abandon the deal. Enter Heavy Hank and Big Benny.

Mr. Lewis informed Mr. Paulson and Mr. Bernanke that he was considering pulling out of the deal to acquire Merrill. This was of great concern to Hank and Benny. After all, if Merrill failed, life would become very difficult for them and for the financial system. What followed could have come straight from the Sopranos.

Mr, Bernanke and Mr. Paulson first tried to reason with Mr. Lewis by pointing out that investors could have negative opinions of he and his firm. When he still balked at following through on the deal, Hank and Benny stated that if did not follow through with the acquisition of Merrill, TARP money could be scarce should Bank of America needed down the road. I spent my youth in Brooklyn. I can picture it.

Hank: Gee Ken, that's a nice bank you have here. It would be a shame if something happened to it.

Benny: You know: money is tight. It oculd be bad for you of there wasn't any left. We're not threatening. We're just saying.


We all know that the financial crisis is dire. Moody's announced today that it is going to review over $300 billion of commercial mortgage-backed securities for possible downgrades. This could be the other shoe dropping for the banks. Maybe the country would be better off if the government would acknowldege that troubled assets on bank balance sheets are going to lead to losses and decide who is going to take them, the banks or the taxpayers. However, in typical Washington fashion, the government continues to look for ways to deal with the losses with no one taking responsibility. Not going to happen. We have a nice country here. It would be a shame if something happened to it.