Washington - Federal Reserve Chairman Ben Bernanke on
Thursday said the US government acted with the 'highest integrity' in
brokering a controversial deal that allowed Bank of America to
acquire investment bank Merrill Lynch.
In testimony before the US Congress, Bernanke insisted the US
central bank did not threaten executives of Bank of America if they
backed out of the deal. The merger's collapse was a real possibility
in December that could have plunged the US financial system back into
crisis.
'The decision to go forward with the merger rightly remained in
the hands of the Bank of America's board and management,' Bernanke
told the Committee on Oversight and Government Reform of the House of
Representatives.
But he acknowledged the government warned Bank of America that it
could trigger a 'broader systemic crisis' if the deal fell through.
In the end, the US Treasury loaned Bank of America 20 billion dollars
to help it complete the merger.
'I believe that the Federal Reserve acted with the highest
integrity throughout its discussions with Bank of America regarding
that company's acquisition of Merrill Lynch,' Bernanke said.
Bank of America first agreed to acquire Merrill Lynch in
September, as the collapse of Lehman Brothers and near collapse of
American International Group (AIG) nearly brought the whole of Wall
Street to its knees.
But Bank of America in December told the government it was
reconsidering the deal as its own financial situation deteriorated.
Lawmakers have questioned whether Bernanke and the US Treasury forced
Bank of America to accept a deal it could not afford.
USA
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