House panel doesn't buy Paulson's answers on Bank of America-Merrill deal
Bank of America was back in the Washington spotlight on Thursday. Members of Congress grilled former Treasury Secretary Henry Paulson about his role in BofA's merger with Merrill Lynch. WFAE's Julie Rose reports on the contentious hearing. On the topic of Bank of America and Merrill Lynch, Henry Paulson is only the latest to appear before the House Committee on Government Oversight and Reform. Fed Chairman Ben Bernanke and BofA CEO Ken Lewis have both taken equally uncomfortable turns in the hot seat. As in those hearings, Thursday's questions for Paulson started with the now-famous exchange in which he allegedly threatened to fire Lewis if he backed out of the Merrill Lynch deal. An exasperated Paulson kept insisting it wasn't a threat, just a statement of fact. "I've now told you three times and told the committee repeatedly that of course I told Lewis the Fed had authority to replace Lewis and the board," said Paulson. Threat or not, members of the Congressional committee seemed certain that statement coerced Lewis to stick with the merger despite his concern that Merrill Lynch was losing lots of money. And Indiana Congressman Dan Burton wanted to know if someone at the Federal Reserve told Paulson to make the threat. Paulson said, "I do not remember Ben Bernanke every suggesting to me that the fed-." Congressman Burton cut Paulson off, "You don't remember? You know Mr. Bernanke said the same thing. He said he didn't remember. . . " Paulson jumped back in and the two went on interrupting each other testily for several minutes until Congressman Burton finally said, "You know, you're a very smart man. I don't think anyone's buying what you're saying right now." And that's pretty much what Paulson's day was like. Members of the committee seemed more intent on venting their anger than getting any answers from Paulson, like Massachusetts Congressman Stephen Lynch. He's upset that Paulson changed course with the so-called TARP money and invested it in banks rather than buying up troubled assets as he'd originally promised. "If you had come up here with Mr. Bernanke and said 'I got a plan. I want to take $800 billion in taxpayer money. I want to give it to my pals in the nine biggest banks in America.' How many votes do you think you would have got up here? And that's why I believe you have misled Congress." Paulson said the quickly declining economy forced him to change course. But he says the report of strong earnings at Goldman Sachs this week is an encouraging sign that taxpayers will get their money back. Bank of America will release its quarterly earnings today.