UPDATE1: Since Congress is looking for someone to blame, who’s going to be the fall guy — will it be Bernanke, Paulson, or Lewis? Former Treasury Secretary Henry Paulson is already out of office, so he makes a good candidate. BofA chief Ken Lewis is the head of an already shaky institution, and his head has been rumored to be on the chopping block for some time now. Then there’s Fed chief Ben Bernanke — his term as Federal Reserve Chairman ends at the ends of January.

While a case could certainly be made for any of the three, Megan McArdle of the Atlantic says that, “firing Bernanke lets Obama portray all of the failures of this year as Bush errors in policy or appointment.” But would that be the smartest move? Read the rest of this entry »

Last Tuesday we wrote that Federal Investigators announced that 20 criminal probes have been launched to investigate possible securities fraud, tax issues, public corruption, insider trading, mortgage-mod fraud, and other crimes associated with the TARP. By the weeks end, accusations into TARP’s “criminal” element grew even stronger — possibly even encompassing those pointing the finger.

New York Attorney General Andrew Cuomo informed Congress last week that Bank of America’s (BofA) coerced acquisition of Merrill Lynch on the part of former Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke amounts to securities fraud. Cuomo suggests that the Federal officials mandated that BofA’s top executive Ken Lewis not disclose Merrill’s massive fourth quarter losses to investors prior to the merger which proved to be a financial disaster.

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Bank of America’s Chief Executive Ken Lewis said today that the $20 billion his institution received in order to secure their takeover of Merrill Lynch was a “tactical mistake.”

While not regretting taking the money, Lewis said he acted far too cautious, and should have requested less. The result caused market observers to view the bank as weak as their competitor Citigroup:

“In hindsight, it was a tactical mistake because it put us in the same category as Citigroup,” said Mr Lewis. “We could still have had 8 per cent tier 1 capital after a $15bn loss but we wanted a cushion.”

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In a recent interview with CNBC’s Maria Bartiromo, Bank of America Chairman and CEO Ken Lewis told the news anchor that BofA would not need any more TARP funds. And, Lewis said, his company is working to pay the government back as soon as possible.

In a strong expression of faith, within the past two weeks Lewis has purchased approximately $2 million worth of BofA shares: Read the rest of this entry »