Elizabeth Warren And The Limits Of Her Responsibility

The Congressional TARP oversight panel chaired by Elizabeth Warren is out with its latest missive. She is scheduled to testify on the contents tomorrow.

Generally, they find little to criticize but they do suggest that the stress tests be redone if the economy worsens. Overall it’s pretty bland but Warren seems intent on stretching the limits of her mandate. She attempts to interject herself and the panel into the circumstances surrounding the acquisition of Merrill by BofA.

From Fox News:

It is reviewing a recent controversy over Bank of America’s purchase of Merrill Lynch, which closed on Jan. 1. As part of an investigation into the acquisition, BofA CEO Ken Lewis testified to the New York Attorney General in February that when he had second thoughts about proceeding with the acquisition because of Merrill’s deteriorating financial condition, he said he felt that then-Treasury Secretary Henry Paulson and Bernanke pressured him to keep silent and complete the deal. Bernanke and Paulson have denied the allegations.  “The fact and nature of the discussions among the Treasury, the Board, and BofA — whatever their exact content — were disclosed neither to the shareholders of BofA nor to the public, whose tax dollars the TARP spends,” Warren wrote in a letter to Bernanke and Geithner in May requesting their thoughts on the matter. “This interaction among Treasury, the Board, and BofA is a warning of the dangers that can arise when the government acts simultaneously as regulator, lender of last resort, and shareholder. (Treasury had purchased $15 billion in convertible preferred stock and warrants of BofA on Oct. 28; as indicated above, it purchased an additional $20 billion of BofA preferred stock and warrants on Jan. 16.) The TARP by its very nature creates conflicts of interest for Treasury and the Board.”

I suppose stating the obvious constitutes attention to detail but frankly this seems a bit beyond her purview. If she believes that by extension any issue touching upon a bank that is a recipient of TARP funds is fair game for her panel then perhaps her Congressional overseers need to redefine the mandate. What went on in that room among Bernanke, Lewis and Paulson is worthy of investigation. There are properly empowered agencies within the government that are fully capable of doing just that. Ms. Warren’s isn’t one of them.

Share

Related Posts

You can leave a response, or trackback from your own site.

Leave a Reply