Sigh. Bank of America/Merrill Lynch/and the Fed part 79 - and so the drama continues. I've said myself that unless top Fed and Treasury officials (read: Bernaulson) are actually prosecuted for this, I'm not too impressed with the song-and-dance. You can line up all the Fed fuckers you want on the Hill but without charges, this is yet another pathetic show of how limp-dicked the United States government is against the Fed.

Oh, wait, you thought we were the ones in charge? Ha! That's cute. Really.

For a not so brief recap, see my June 26: Next Up on the Hill for Bank of America/Merrill/Federal Reserve BS Part 64: Hank Paulson!

Anyway, I found this piece by Napolitano so awe-inspiring that I present it to you now, dear reader, sans snarky commentary. America wants indictments. End of story.

Via Fox News Senior Judicial Analyst Judge Andrew P. Napolitano:

The Secretary of the Treasury and the Chair of the Federal Reserve have taken an oath to uphold the Constitution and the federal laws. Among those laws is the obligation of management of publicly traded corporations to inform shareholders in a meaningful way of the risks attendant upon all extraordinary corporate activity, including major acquisitions.

The acquisition of Merrill Lynch by the Bank of America was surely a major acquisition and an extraordinary corporate act. The president of B of A now tells us that the Secretary and the Chair told him not to inform his shareholders that Merrill Lynch was truly a risky investment. As it turns out, when Ken Lewis learned that Merrill Lynch was worth about $17 billion less than the $50 billion agreed upon amount, he attempted to invoke the material adverse change (MAC) clause in the contract of acquisition, which would have given him the option of getting Merrill Lynch for $33 billion or walking away from the deal.

“Ken Lewis, Henry Paulson, John Thain, Ben Bernanke, and Jeffrey Lacker, the President of the Federal Reserve Bank of Richmond, should all be prosecuted for extortion, conspiracy to extort, criminal fraud, and theft of honest services; and they should be imprisoned if convicted.”


The former president of Merrill Lynch, John Thain, is not happy that he was fired from B of A, even though he left a very wealthy man. He does not refute Ken Lewis’ statements. He only argues that Lewis and the B of A folks knew what Merrill Lynch was worth when they bought it. He may have inadvertently opened a new can of worms for himself: Did he knowingly sell an asset to a public company, which had received a huge federal investment, for $17 billion less than he knew it was worth?

The failure of the president of B of A to have revealed the risks of the acquisition to shareholders, as the law requires, and his failure to exercise the MAC clause were acts of fraud and directly violate laws enforced by the SEC. As for Paulson and Bernanke, they were participants in a criminal conspiracy to defraud B of A shareholders. We also now know that the Fed in DC and its regional bank in Richmond threatened to fire Ken Lewis and his management team if B of A did not follow through with the Merrill Lynch acquisition for the full $50 billion. This is EXTORTION. It is the threat to perform a lawful act in order to compel a person to exercise his free will adverse to his own interests or his fiduciary obligations. Unfortunately for Ken Lewis, “the government made me do it” is not a defense to a criminal indictment. Ken Lewis, Henry Paulson, John Thain, Ben Bernanke, and Jeffrey Lacker, the President of the Federal Reserve Bank of Richmond, should all be prosecuted for extortion, conspiracy to extort, criminal fraud, and theft of honest services; and they should be imprisoned if convicted.

Ouch. I'm with Napolitano on every point except Lacker playing a part in this. As I've said from the beginning, let's make sure we're watching the right criminals, kids. Just because Bank of America happened to belong to Richmond doesn't mean we need to start calling for his head too. From what I've read of the e-mail exchanges, Richmond didn't necessarily play the game correctly but it has certainly not been implied that BofA's regulator played a part in duping BofA shareholders.

Just sayin... and no, not just because Lacker is my favorite. Shush.