THIS would be the reason why the government should not be allowed to bailout private companies and then tell them what to do, AND the reason we haven’t been able to trust the government and would be fools to continue to do so.
Government regulators threatened to remove top Bank of America executives if they backed out of a buyout of failing brokerage giant Merrill Lynch, and offered to provide taxpayer funds to compensate for Merrill’s poor performance, according to company records obtained by The Washington Times.
The documents – e-mails between bank executives and their outside attorneys as well as board meeting “talking points” prepared for then-Bank of America Chief Executive Ken Lewis – offer new insight into the hardball tactics that produced one of the biggest deals negotiated during the late 2008 global financial crisis, one that is still reverberating on Wall Street and in Washington.
They also underscore the fear shared by then-Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Board Chairman Ben S. Bernanke that allowing the deal to fall through would mean a sequel to the collapse of Lehman Brothers, whose failure months earlier sent the world economy into a tailspin.
“It’s highly unusual for a government agency – let alone a Treasury secretary and a Fed official – to virtually order a company to do something like this under threat of removal,”said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at the Boston University School of Law. “It raises a fascinating question which is, if you’re Bank of America and you have a shareholder’s interests paramount in your mind, what is your liability if you go against those interests in the interests of the country?”
Oct. 21 (Bloomberg) — The Obama administration will order seven companies that received the most government assistance to cut salaries of top executives by 90 percent on average, a person familiar with the situation said.
The Treasury Department’s announcement will come this week, the person said on condition of anonymity. Total compensation, including bonuses and other benefits, for the 25 highest-paid executives must be reduced by about 50 percent, the person said.
So maybe this administration is tryingto destroy the big banks by helping them?
CHICAGO (Reuters) – General Motors Co’s bid to find an outsider to replace its chief financial officer is being complicated by pay restrictions imposed on companies that got big U.S. government bailouts, The Wall Street Journal said on Saturday.
GM executives met recently with U.S. Treasury pay czar Kenneth Feinberg and left with the understanding the automaker would be able to offer a significant amount of stock but no more than a $1 million annual salary, the newspaper said, citing people familiar with the matter.
Sources have told Reuters that GM directors in September backed a plan for CFO Ray Young to leave the company.
GM emerged from bankruptcy in July after receiving $50 billion in emergency U.S. financing.
A spokesman for GM would not comment on whether the CFO search specifically was being hindered by the pay restrictions.
“We’ve consistently said that one challenge to filling any position from outside might be the pay restrictions,” GM spokesman Tom Wilkinson said.
We knew this was coming; the best and the brightest avoiding the government controlled companies for just this reason. I wonder how GM is going to pay us back when they go under for real?
The war to flip this country to socialism continues.
Hank Paulson was a 32 year career Goldman Sachs soldier. He also ran the company as COO and CEO from 1998 through 2006 . . . the exact years that we saw the creation of toxic assets developed by his boys and girls at Goldman Sachs. He left Goldman Sachs at the peak of the bubble to take over the Treasury Secretary job so he could complete the final phase of his scheme . . . cover up, steal a few trillion more, laugh at you and the American public.
Hank Paulson being questioned by Mr. Stearns (FL) about the Bank of America merger with Merrill Lynch. I find the deferred tax issue consistent with the rest of the players now in positions of power, and it is nice to watch Hank squirm even if it is not going to have any real, lasting effect.
On Wednesday, TurboTax Timmie and his crew are going to unveil the new financial regulation reforms that they have been talking about since he was installed as Treasury Secretary by the 111th Congress.
If, after reading the next two stories, you still think the Federal Reserve should not be abolished for being the #1 instigator in our economic woes, then I pity you and your declining standard of living.
The Federal Reserve, already arguably the most powerful agency in the U.S. government, will get sweeping new authority to regulate any company whose failure could endanger the U.S. economy and markets under the Obama administration’s regulatory overhaul plan.
Please remember that the Federal Reserve is really a banking cartel; not a government agency, that was created in 1910 on Jekyll Island by NY bankers, and our government does not instruct The Fed; the power flows the opposite direction.
The final plan due to be released on Wednesday — which originally aimed to streamline and consolidate banking and securities regulation in one or two agencies — now is expected to sidestep most jurisdictional disputes and simply impose across the board standards to be applied by all financial regulators, according to administration and industry sources.
The most likely candidate for elimination is the Office of Thrift Supervision, whose failure to detect and forestall problems at Countrywide, IndyMac, Washington Mutual and other freewheeling mortgage lenders is thought to have contributed to the financial crisis.
The decision to concentrate sweeping new powers at the already overstretched Fed is not without controversy. Sen. Christopher J. Dodd, chairman of the Committee on Banking, Housing and Urban Affairs, which must approve any regulatory overhaul, has raised objections to that approach, and so has Federal Deposit Insurance Corp. Chairman Sheila C. Bair.
Ms. Bair advocates an alternative where a council of top bank regulators would make decisions on whether to step in, regulate or close major corporations like the American International Group whose failure posed a risk to the whole economy and financial system. The Fed stepped in to save AIG last year without having such powers, but the result was a costly and muddled bailout that no one wants to repeat.
To accommodate dissenting views, the administration will propose that a council of regulators advise the Fed, although the Fed will have the final say, according to administration officials. The new powers augment the Fed’s existing broad authorities to intervene to prevent crises that could seriously damage the markets and economy.
And now for something totally expected from a banking cartel:
Bank of America’s chief executive Thursday for the first time said publicly that officials in the Bush administration and the Federal Reserve threatened to remove top executives of the bank unless the financial giant merged with the troubled Merrill Lynch for the good of the foundering economy.
Bank of America’s Kenneth Lewis told the House Oversight and Government Reform Committee that the threat was not the deciding factor in the bank’s acquisition of the nation’s largest investment banking firm. But he added: “What gave me concern was that they would make that threat to a bank in good standing.”
Ken? You are a moron! What does being a bank in good standing have to do with threats being made against a private company in a country that has as it’s basis, the Constitution and the Rule Of Law?
The testimony came as the No. 2 Republican in the House said President Obama’s handling of the auto company bailouts was comparable to the strong-arm tactics of Russian Prime Minister Vladimir Putin.
If you have not thrown your support behind Ron Paul and H.R. 1207, now might be a good time before The Fed becomes tired of being a shadow chess player and just strangles the economy and country into submission.
It never fails to amaze me that people will appear to testify under oath at a congressional hearing and try to make events seem completely different than what they are even when there is a known paper trail. Did Lewis think that Bernanke was going to cover his behind? I personally think there is much more to this story; whether we ever find out how much Bernanke and The Fed actually had to do with the merger of BofA and Merrill Lynch is another story completely.
Watch as Rep. Dennis Kucinich, (who seems to have found his cajones), puts Kenneth Lewis, (former Bank of America CEO), through the gauntlet of the House Committee on Oversight and Government Reform. I hope the irony of the name of the committee has not been lost on you, and that you understand that this little dog and pony show is just for you, the American public.
Also remember that this mess started decades ago with The Fed, Congress, the big NY Banks, and the SEC. I wonder if the message that we cannot trust our government is getting through yet? Bush threw gasoline on this economic downturn, and Obama is striving for complete scorched earth with the help of Rahm, David, Austin, etc.