WASHINGTON — Federal Reserve Chairman Ben Bernanke defended the central bank’s actions during tense negotiations with Bank of America Corp. over the acquisition of Merrill Lynch, but he faced open hostility and skepticism from federal lawmakers.
Ignoring the deferential tone usually reserved for Fed chairmen, lawmakers on the House Committee on Oversight and Government Reform repeatedly interrupted Bernanke and grilled him on internal Fed e-mails subpoenaed by the committee and projected on a screen in the hearing room.
The central issue: claims by Bank of America chief executive Kenneth Lewis that officials threatened to oust management if they abandoned the Merrill Lynch deal.
“Did you personally tell Mr. Lewis that you would fire him or remove the Bank of America board?” asked chairman Edolphus Towns, D-N.Y., striking a common refrain.
Bernanke’s simple answer: No.
“I never made any threats to Mr. Lewis about removing the board or the management,” Bernanke repeated and rephrased frequently.
That simple response did not sit well with lawmakers in light of a Dec. 21 e-mail unearthed by the panel between Federal Reserve Bank of Richmond president Jeffrey Lacker and other Fed employees. In that e-mail, Lacker recounts a conversation with Bernanke and says the Fed chief planned to tell Bank of America that “management is gone” if they quashed the deal and later needed more government aid.
