Before I begin this post, I would like to introduce "Mr. G". This is actually not his name, but an anonymous moniker that I use to protect his wishes for privacy. He is a very successful business man who worked with one of Wall Street’s white shoe firms. Since this period, Mr. G has moved on to bigger and better things and is even more connected and much wealthier than he was from his investment banking days. He is a dear friend and mentor of mine with whom I periodically communicate via phone or email.
Today, I bring you his comments via email excerpts, with the inclusion of my own two cents' worth, on the investigation of Ben Bernanke’s role in Bank of America’s (NYSE:BAC) decision to purchase Merrill Lynch.
Excerpt of my email to Mr. G:
"Hey Mr. G,
It’s been a while.
As you are an informed citizen, I wanted to elicit your take on this whole Fed cover-up issue. (By the way, I’m being sincere with my inquiry as I respect your opinions in lieu of our political divergences.)
Do you think Hammering Hank & Uncle Ben actually cornered Ken Lewis, put him in a headlock, and threatened to give him a swirly if he reneged on the Merrill deal?
Desperate times often call for desperate measures and I generally don’t put much stock in the integrity of men, especially those from government. Anything is possible.
What’s really bizarre about all this is that we have a Republican, Issa, making these allegations against Bernanke while Warren Buffett, a supporter of and advisor to the Obama Administration gives the Fed Chairman a solid endorsement. In the midst of all this are some elements of the right wing media calling this a conspiracy by the Obama team to get rid of Ben.
Who’s right and who’s wrong is beyond me. I could fathom involvement from both sides of the aisle although I fail to see the motivation. Republicans dislike Bernanke because he works with the Obama Administration and some Democrats snub him because he was selected by the Bush Administration.
Anyway, part of the conspiracy theorist in me sees inciting a lynch mob as a ruse for distraction or misdirection in an effort to divert attention from other issues of vital importance.
Whatever the case, it is this type of pusillanimous political bickering that I absolutely deplore about America. If something is amiss, then let’s investigate it without trashing or discrediting Bernanke and distracting his focus from a far-from-over crisis at hand. While the Fed doctor is in the operating room performing reconstructive surgery, allow him to complete his task or be officially relieved before charging him with malpractice.
The American people and its media have a dysfunctional penchant for public lynchings and due process often takes a back seat to their amygdalean impulses.
May God forgive and help us all…"
Mr. G’s excerpted response to my email:
Of course they did!
Think about the set up:
1) Bear Stearns and Lehman Brothers stuck investment banking into the new and exciting world of bankruptcy, and with it … investment banking flavored illiquidity
2) Not wanting to be left out, AIG mentions that investment banking illiquidity might have a not so great effect on the world of off balance sheet finance … derivative flavored illiquidity
3) Indy Mac (IDMCQ.PK) leads a cast of local "oopsy daisy" lenders and actually hosts a "run on the bank", bringing us … local banking flavored illiquidity
4) Wachovia and Citi (NYSE:C) don’t want to be left out, so they belly up to the bar … money center flavored illiquidity
5) While they're not officially banks, industrial lenders like GE Capital decide that they might not be quite as AAA as they thought … non-bank bank flavored illiquidity
6) And finally, just to prove that illiquidity actually matters, GM (GMGMQ.PK) and Chrysler raise their hands and say, "oh by the way, if we don’t get some more of those dead presidents, we might have the unfortunate task of ushering in a million more people to the ever growing soup line …
Where’s that Reagan cheese when you need it?"
So, when B of A thought it was getting a great deal buying Merrill at what was a bargain basement price, right before they discovered two more levels of basement, I’m guessing Ken Lewis said "get me that M&A agreement, I want to get out of this thing before they take us (me) down to the seventh level of that Dante book."
It’s at this point that the Hank and Ben show kicks into high gear and they say, "wow, people really are going to remember us once we’re gone, we’re they guys who presided over the death of the greatest wealth-creating nation of the last two millennium. Maybe we ought to forget about the law for a few minutes and just stop this thing before it’s too late. Because before you know it, the people will become disenchanted with capitalism and they will start believing the historic lies of socialism. Then, we will end up with the government deciding that it has the power to fire CEOs and dictate the salaries for bankers."
So yea, I think they gave him a dirty look and said, "If you back away from this deal you’re going to be the first CEO in history to get an atomic wedgie from a bureaucrat!"
Of course, I could be wrong…"
Well gentle readers, now you have a couple more opinions on this whole mess. I really feel sorry for my Uncle Ben who I believe is inclined towards honesty.
However, in times of war, e.g. the current one against an economic meltdown, difficult decisions and sacrifices are demanded. Typically, the brunt of the sacrifice is borne by common infantry and in this instance the Fed and Treasury’s infantry are the American taxpayers (which includes all of us).
Is it morally right or politically correct? I think not, but making erroneous judgements in the heat of battle is not a war crime either. At the same time, every effort must be made to reduce unnecessary casualties, i.e. wasteful spending of taxpayer dollars to resolve this crisis and stimulate the economy.
If the American people and media really want to villify or lynch someone, they should consider going after the players from the public and private sectors who facilitated and perpetrated these events instead of the people who are attempting to clean up this "POS" for which they are not responsible.
Disclosure: Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.