The Political Whore

By Al Coryell
PoHo correspondent

RECESSIONOMICS

Question: Do you think the Federal Reserve is going to be able to guide us out of this economic catastrophe?

I’m going to tell you a story -  a story of corruption, deceit, greed and political intrigue. As it turns out, a true story, one stranger than fiction as true stories usually are. But amazingly, this story is little known by most of you, for the parties whom the story is about do a masterful job of hiding their true intentions while convincing you they are your best friends. They insist you need them, and without them your lives would be chaos. It’s all smoke, of course. But I assure you, most of you believe them because the machine they control is incredibly powerful. So powerful, in fact, that… well I get ahead of myself.

The story begins just after the turn of the 20th century, when, in 1910, seven men board a train in Hoboken, N.J.

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Explosive stuff from the Wall Street Journal:

Federal Reserve Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America Corp. to not discuss its increasingly troubled plan to buy Merrill Lynch & Co. — a deal that later triggered a government bailout of BofA — according to testimony by Kenneth Lewis, the bank’s chief executive.

Mr. Lewis, testifying under oath before New York’s attorney general in February, told prosecutors that he believed Messrs. Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, the struggling brokerage giant. As part of his testimony, a transcript of which was reviewed by The Wall Street Journal, Mr. Lewis said the government wanted him to keep quiet while the two sides negotiated government funding to help BofA absorb Merrill and its huge losses.

Under normal circumstances, banks must alert their shareholders of any materially significant financial hits. But these weren’t normal times: Late last year, Wall Street was crumbling and BofA faced intense government pressure to buy Merrill to keep the crisis from spreading. Disclosing losses at Merrill — which eventually totaled $15.84 billion for the fourth quarter — could have given BofA’s shareholders an opportunity to stop the deal and let Merrill collapse instead.

The Wall Street Journal has transcript excerpts.

Hey, PoHo blog peeps, will you be our valentine?

• America loves Obama!
• But Ohio still loves Hillary!
• Huckabee loves the Cayman Islands!
• Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson love the economy in ‘08!
• Space station astronauts love their firearms!
• Supreme Court Justice Antonin Scalia loves torture!
• Jane Fonda loves the C-word!
• Developers, Apple fanboys and me love the upcoming iPhone/iPod Touch developer’s kit!