Geithner, Summers Endorsed Dubious Bank of America-Merrill Lynch Deal
Bush administration officials have been under fire for effectively forcing a merger last December between Bank of America and Merrill Lynch without informing
Jul 31, 2020178.7K Shares3M Views
Bush administration officials have been under firefor effectively forcinga merger last December between Bank of America and Merrill Lynch without informing BoA shareholders of the financial dire straights Merrill was in at the time.
But yesterday the Obama administration was pulled more deeply into the scandal as well, after newly unveiled BoA documents suggested that both incoming Treasury Secretary Tim Geithnerand incoming senior economic adviser Larry Summers had endorsed the merger as well. From The Washington Post:
“„Bank of America chief executive Kenneth D. Lewis told the company’s board that Federal Reserve Chairman Ben Bernanke told him “that Geithner and, in addition, Larry Summers, were both on board with the transaction,” according to Dec. 22 talking points prepared for a conference call.
Both the White House and the Treasury Department have denied that Geithner and Summers were influential in pushing the merger, even if they knew about it, the Post reported. But their involvement at any level might explain why the Obama administration’s Securities Exchange Commission was so light in penalizing BoA for a failure to tell its shareholders about $3.6 billion in bonuses Merrill was poised to pay its employees around the time of the merger. The $33 million SEC fine — which effectively charged company shareholders for the alleged crimes of company executives — was thrown outby a federal judge last month. According to U.S. District Judge Jed Rakoff, “The notion that Bank of America shareholders, having been lied to blatantly in connection with the multibillion-dollar purchase of a huge, nearly bankrupt company, need to lose another $33 million of their money . . . is absurd.” Rakoff has ordered a trial to be held in February.
The saga hasn’t been lost on some lawmakers. The House Oversight and Government Reform Committee has undertaken an extensive investigationinto the details of the dubious merger — including those surrounding the decision to hide Merrill’s bonus payments from BoA shareholders. The committee will hold its fourth hearing on the episode this Thursday. Witnesses will include SEC Chairman Mary Schapiro, former SEC Chairman Christopher Cox, and Sheila Bair, head of the Federal Deposit Insurance Corporation.
Paolo Reyna
Reviewer
Paolo Reyna is a writer and storyteller with a wide range of interests. He graduated from New York University with a Bachelor of Arts in Journalism and Media Studies.
Paolo enjoys writing about celebrity culture, gaming, visual arts, and events. He has a keen eye for trends in popular culture and an enthusiasm for exploring new ideas. Paolo's writing aims to inform and entertain while providing fresh perspectives on the topics that interest him most.
In his free time, he loves to travel, watch films, read books, and socialize with friends.
Latest Articles
Popular Articles