Word: paulson
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Dates: during 2000-2009
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...watching all of this - that action was almost certainly not ethical. It was a case of two men with the power to determine the fate of another man and the company he led by taking all of his responsibilities out of his hands. By the action, Bernanke and Paulson pushed Lewis to betray a trust to his shareholders, his customers, and his employees. Bank of America has been on many of the lists of mortally ill banks which may have to be broken up or nationalized since the Merrill buyout. This, in and of itself, has cost the firm...
...case in point is the conversation that Ken Lewis, CEO of Bank of America (BAC), says that he had with former Treasury Secretary Henry Paulson. According to information released by NY State Attorney General and governor-in-waiting Andrew Cuomo, Lewis was threatened by Paulson who told him that the entire B of A board would be dumped if the bank backed out of a deal to buy Merrill Lynch. Passing the blame, Paulson claimed he was merely doing the dirty work of Fed chief Ben Bernanke. Bernanke has tried to distance himself from the event. The press has used...
...Bernanke and Paulson were doing what they thought was necessary to prevent what they viewed as a possible catastrophic failure of the national and perhaps global banking system. If Merrill Lynch had been left on its own to suffer huge fourth quarter losses, it might have faced a fate like that of the departed Lehman. Morgan Stanley (MS) nearly had the same set of problems until the Japanese financial house Mitsubishi UFJ agreed to honor a commitment to put $9 billion into the U.S. investment firm. Whether their presumption was right or not, it appears that Paulson and Bernanke believed...
...What has been left out of the news reports about the strong-arming of Lewis is whether it was ethical. It may have been the only approach to take in Paulson and Bernanke's views. The SEC may claim that the action was not legal because Lewis had an obligation to disclose the conversation to both his board and to his shareholders. He was being asked to act against the interests of the bank he runs in the name of the national interest...
...Saving the banking system was not Lewis's job. Bernanke and Paulson had no right to ask him to abandon what were his very clear duties and press him into service doing something contrary to the obligations of his office. Since there will never be answers to what would have happened if B of A had abandoned Merrill it is useless to speculate about whether Paulson and Bernanke did the right thing. What happened when Lewis was asked to take a role which was not reasonably his is that the ethical obligation of refraining from force to pervert another person...