Thursday, June 11, 2009

The Lesson from the Fed Emails on Bank of America

The Fed emails coming to light should not come as a surprise. B of A was muscled in to acquiring Merrill, even after B of A became nervous about increasing losses at Merrill.

A Dec. 21 email from Federal Reserve Bank of Richmond President Jeffrey Lacker to Fed employees said Bernanke "intends to make it even more clear" that if Bank of America kills the Merrill deal, and later needs government assistance, "management is gone." Lacker added he had had a "long talk with Ben" about the matter, according to WSJ.

The lesson here is simple. Government will use the vicious tools at its disposal when it chooses to. The new compensation oversight plan is nothing but creating more vicious tools at the disposal of government.

Not good.

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