Friday, April 24, 2009

Who's Lying?

According to Ken Lewis, CEO of Bank of America, Paulson and Bernanke told Lewis not to discuss BOA's take over of Merrill Lynch. In the WSJ today, we read
News Alert
from The Wall Street Journal

The Federal Reserve didn't advise Bank of America or CEO Ken Lewis "on any questions of disclosure," a spokeswoman for Fed Chairman Ben Bernanke said.

Lewis has told New York's attorney general that then-Treasury Secretary Henry Paulson and Bernanke pressured him in December not to discuss issues with its pending purchase of Merrill Lynch.

"It has long been the Federal Reserve's view that questions of this nature are best addressed by individual institutions and their legal counsel, as they are in a position to understand clearly their obligations and responsibilities," the spokeswoman, Michelle A. Smith, said.
So, either Lewis is lying, Bernanke is lying, or both are lying. Is there some other way to interpret this contradiction in statements?

What does Lewis have to gain from his statements? What does Bernanke have to gain from his denial? The market will sort Lewis out, regardless of whether he's lying or not. But Bernanke is only 4 years into a 14-year appointment as a member of the Board of Governors of the Fed. He is also running for reappointment to a second 5-year term as Chair of the BOG of the Fed. Hmmmm.

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