More clues to an ongoing financial mystery emerged Thursday on Capitol Hill, with former Treasury Secretary Henry Paulson taking the political stage to declare that it was he who pressured Bank of America to buy Merrill Lynch in December.
Even as Paulson told lawmakers he did what he thought was best, they criticized him for overstepping his regulatory boundaries and working in the shadows on a matter they said required more oversight and public disclosure.
"In a way, the Bank of America-Merrill Lynch deal illustrates the dangers of concentrating enormous power in only one or two individuals," said Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee.
Paulson is the third witness to testify before the committee about the blur of anxiety at the top levels of the U.S. financial regulatory agencies in the days before the government-brokered purchase of Merrill Lynch by Bank of America, which was then the nation's largest commercial bank.
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Bank of America Chief Executive Ken Lewis previously told the committee that both Paulson and Federal Reserve Chairman Ben Bernanke made a simple threat to him: Back out of the Merrill Lynch merger and you and Bank of America's board of directors will lose your jobs.
Last month, Bernanke denied making any such threat.
Seated alone at a long table Thursday, Paulson submitted to three and a half hours of often heated questioning, his raspy voice so low at times that lawmakers repeatedly had to remind him to lean into his microphone.
His testimony comes as Congress widens its probe into the Bank of America merger with Merrill Lynch, which took place as financial regulators scrambled to keep markets afloat. Bank of America shareholders have filed suit over the deal, saying the extent of Merrill Lynch's fourth-quarter losses was kept hidden before their vote approving the deal.
Lawmakers on both sides of the aisle also are examining whether last year's government intrusion helped or worsened the financial crisis.