Federal Reserve Possibly Delayed Merrill Lynch Loss Disclosures According to Internal Email

June 24, 2009 by · Leave a Comment
Filed under: Legal News 

This just shows more of the opaqueness in our U.S. financial system.   When we are looking to gain back trust and confidence, these types of findings are counter-productive but needed to put light on the issue of transparency and doing what is right now what is politically convenient.  We still do not know where $2 trillion in loan agreements or where most the money from A.I.G went.  These are important questions that should be asked and answered no matter how damaging it is.  We have totally bailout out and propped up a bunch of actors that have been liquidated and sold to the highest bidder.  Once the truth is known, then and only then will we have the information in hand to make the hard choices and put in place or enforce rules and regulations that will protect the investor and punish the overly greedy.

News (Bloomberg):

House Republican staffers said the Federal Reserve tried to control the timing of disclosures of rising losses at Merrill Lynch & Co. in the weeks leading up to its takeover by Bank of America Corp., according to a memo obtained by Bloomberg.

The memo, prepared by staffers for Republican lawmakers at a House Oversight Committee hearing tomorrow, cites what it identifies as excerpts from internal Fed e-mails to support the conclusion. Fed Chairman Ben S. Bernanke is scheduled to testify at tomorrow’s hearing in Washington.

The e-mails show that the Fed “engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other Federal Regulatory agencies,” Representative Darrell Issa, the panel’s senior Republican, said in an e-mailed statement.

A Fed official was prepared to “steer” Merrill toward announcing the losses later, the memo cited an e-mail as saying. The attempt became moot after Merrill decided to let Bank of America announce the losses when it reported first-quarter earnings in mid-January, the memo said. The deal was completed on Jan. 1, while Merrill’s fourth-quarter loss of $15.3 billion, later revised to $15.8 billion, was disclosed on Jan. 16.

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