Very interesting story here about the extent to which "the heavy hand of government" was used during the dying days of the Bush Administration, just as it is being now used in the Obama Administration. Bank of America Chairman Ken Lewis testified to a New York prosecutor that he had been pressured by the former Treasury Secretary and Fed Chairman Bernanke to go through with the deal to buy Merrill Lynch even after the full extent of Lynch's insolvency was discovered. BOA felt that it could get out of the deal through an escape clause in the contract, but the feds believed such an action would send a devastating signal to the financial world, one that would have unbalanced the whole system.
So we see again the notion at work that in order for the system to survive, it would have to be artificially propped up. I'm unwilling to dismiss this approach, because I simply do not have the experience or insight to dispute it. But anyone who blames "free markets" on what has gone wrong in our country thoroughly understands how un-free those markets always were, and how less free they are becoming.
Friday, April 24, 2009
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It appears that Mr.Lewis lacked the integrity and courage to do the right thing and instead caved in to Bernanke's demands.
Having the financial system artificially propped up is no different than artificially inflating or propping up the grades of students or artificially lowering promotion standards in jobs to achieve a socially desired end. Both of which helped produce the kind of people who were instrumental in bringing our economy down causeing immense injury to our once great country.
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