Towns Issues Second Subpoena in Merrill Lynch Takeover

Posted June 19, 2009 at 12:55pm

Updated: 3:21 p.m.

House Oversight and Government Reform Chairman Edolphus Towns (D-N.Y.) on Friday served a second subpoena to the Federal Reserve seeking further documents relating to Bank of America’s forced takeover of Merrill Lynch.

Specifically, the committee is after documents dating from September 2008 to January 2009 between the Fed, the Treasury Department and Bank of America. The documents detail closed-door discussions that led up to the merger, which involved $20 billion in federal taxpayer dollars.

The committee has been investigating the circumstances surrounding the deal. It will hold a hearing Thursday, during which Fed Chairman Ben Bernanke will testify.

So far, the committee has subpoenaed close to 100 documents, including e-mails from Bernanke, Treasury Secretary Timothy Geithner and Bank of America CEO Ken Lewis. Former Treasury Secretary Henry Paulson, who played a role in crafting the merger in 2008, is expected to appear before the committee separately in July.

A spokesman for ranking member Darrell Issa (R-Calif.) said the more documents the committee receives, the more apparent it is that Lewis was pressured to go through with the merger.

“The issue isn’t about the decision to make the deal, but rather, the circumstances in which that decision was made and who was involved. At a time when there are movements to grant more power to the Fed, it is essential that any overreaching is brought to light and addressed,— Issa spokesman Kurt Bardella said.