Crossing the Line?

NYS Attorney General Andrew Cuomo has been on a tear of late, and while I think that he's got his sights set on the Second Floor in Albany, this latest report has national repercussions.

A letter from New York Attorney General Andrew Cuomo's office released Thursday said Lewis testified in February that former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke threatened to oust Bank of America's management if the bank tried to back out of buying the investment bank.

The government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under, setting off one of the most intense periods of the financial crisis.

Bank of America acquired New York-based Merrill Jan. 1.

The bank was forced to acquire Merrill Lynch, and any doubts on the acquisition were suppressed because the government forced the deal. The federal government demanded the purchase or else threatened to oust management.

This is yet more evidence that the TARP and credit crisis have greatly enlarged the federal government's grasp of the financial markets, and that it's role has not been that of a good shepherd, but rather to pick and choose winners and losers, regardless of the true costs and has reoriented the risk of loss onto taxpayers.

It's antithetical to the markets, and the government's record of picking winners has been awful.

UPDATE:
I'm not alone in wondering how the supposed regulators of the financial markets were able to basically defraud shareholders of Bank of America by making the company take on risk without informing them of same. Bank of America's management was told to cover up the risk or else face the loss of their jobs because of the shaky financial picture in the credit markets. So, the solution was to heap still more risk on a private entity that was to that point solvent?