Merrill, Muzzle, and the Mob

The Bank of America-Merrill Lynch deal has pretty much looked rotten from the start, but the accusations flying around today about who-said-what are making it downright putrid.

This morning's Wall Street Journal must have landed with a particularly loud thud on Henry Paulson's and Ben Bernanke's doorsteps. In it, a story included testimony by Bank of America chief executive Ken Lewis that specifically fingered former Treasury secretary Paulson and Federal Reserve chairman Ben Bernanke for effectively muzzling Lewis on the ugly details of the Merrill financial picture. Basically, Lewis says he wanted to disclose the bank's losses to shareholders and kill the deal but Paulson and Bernanke instructed him not to.

Paulson and Bernanke denied the charges.

But later today, New York attorney general Andrew Cuomo corroborated Lewis's testimony. In an angry letter to regulars and lawmakers overseeing the TARP bailout program, Cuomo says that his investigation found that Paulson actually threatened to oust Lewis and the Bank of America board if they walked away from the Merrill deal. Paulson himself corroborated this story, according to Cuomo, but he said he made the threat at the request of Bernanke.

Now we understand why Ken Lewis always seems so nervous and uncomfortable in public appearances. Managing a waste removal franchise for Tony Soprano would be less stressful than holding out your shareholders to dry in order to save your job and the U.S. financial system at the secret demand of the Federal Reserve chairman and Secretary of the Treasury.

Is this a conspiracy theory or a political stunt or the truth? Whatever the case, Joe Weisenthal at the Business Insider has it right: it's time to put these guys under oath in public to find out exactly who is lying. It's pretty clear someone is.

by Megan Barnett