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Fed up with Bank of America

A new light is being shed on Federal Reserve Chairman Ben Bernanke's role in Bank of America's acquisition of Merrill Lynch.

The subpoena comes ahead of a hearing next week were Bernanke will testify.

The House Oversight and Government Reform Committee have accused Bernanke and President Bush's treasury secretary, Hank Paulson, of strong arming Bank of America Corp. Chief Executive Kenneth Lewis into a deal for troubled Merrill Lynch and urging him to keep quiet about the financial problems.

Lewis possibly violated his fiduciary duty to the bank's shareholders by not divulging that information. Lawmakers are also questioning Lewis as to whether he threatened to stop the merger in order to squeeze money from the government.

Bank of America has received $45 billion of TARP bailout money, $20 billion from the acquisition of Merrill Lynch.

Last week, chairman Rep. Ed Towns, D-N.Y., and Rep. Darrell Issa, R-Calif., said the panel had reviewed documents that was at the expense of taxpayers and called it a "shotgun wedding" merger.

At a June 11 hearing Towns said "The question may be ... who was holding the shotgun?"

In testimony before the committee, Lewis said publicly for the first time that his job was threatened after he expressed second thoughts about the merger. Lewis said then-Treasury Secretary Hank Paulson and federal regulators made clear that if the bank reneged on its promise they would force his ouster and that of board members at the bank.

"What gave me concern is that they gave that threat to a bank in good standing," Lewis told the House Oversight and Government Reform Committee. "So it showed the seriousness with which they thought that we should not" back out.

Paulson and Federal Reserve Chairman Ben Bernanke also pledged government aid to Bank of America to help absorb the losses, Lewis said.