Hearings in Congress about the Federal Reserve Board and Bank of America (BofA), which received $20 billion in federal aid, are focusing on whether Fed chairman Ben Bernanke threatened BofA’s CEO, Kenneth Lewis, with firing if the bank first refused, and then came back for, federal bail-out monies.   Michael Crittenden and Jon Hilsenrath deliver the story in the Wall Street Journal. The Fed had determined Bank of America needed help, but the bank, apparently, was playing it coy.  According to Bernanke’s aides, the Fed chief made it clear that if BofA said no first, and then later came begging for help, "management [would be] gone." 

It’s hard to see what’s wrong with the Fed playing hardball with a bank that led the industry’s charge toward disaster.  Individual managers at companies like Bank of America and AIG have shown that they’re perfectly comfortable putting their own fortunes ahead of the country’s.  So why shouldn’t these companies’ chief creditor — the federal government — call the shots every now and then?  It’s hard to see why Kenneth Lewis should be able to bandy about $20 billion when, as Crittenden and Hilsenrath report, regulators have been downgrading the bank’s overall ratings and "hand[ing] down a confidential supervisory action that forced the company to improve governance . . . [and] improve risk management."   And here Members of Congress are shocked — shocked! — that people talking about massive sums of taxpayer money would speak frankly with paragons of private industry. -NH

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