lewis, as i recall, had decided not to invoking the m.a.c. and that laid open the basis for developing the transaction but, again, i never told anyone to threaten mr. lewis. >> thank you. >> i thank the gentleman. chair recognizes mr. cummings of maryland. you may proceed. >> thank you very much, mr. chairman. mr. bernanke, as i've listened to you carefully, i think i get it. i think i get it. you are so -- you were so intertwined in this thing and following up one mr. mchen try's questions it's hard to see where your participation ended and where paulson's began. and i just take you to your own statement. one of the first things you say in your background is on september 15, bank of america announced an agreement with merrill lynch. i did not play a role in arranging this transaction and no federal reserve assistance was promised or provided in connection with with that agreement. is that accurate, yes or no? >> yes. >> all right. oops well then you go on to talk about all the things you did do. i'm confused. let's talk about this whole situa

the advice of my attorneys was that the m.a.c. would be unlikely to succeed and even if there was a significant probability, it could have caused a lot of disruption in the markets. >> we appreciate your effort here, i'll turn the rest over to mr. jordan ask thank you for everything you and tried to do to help our country. >> mr. bernanke, when did you know that you would not be able to go in and buy the toxic assets, mortgage-backed securities because if you remember back, the whole package was sold to the united states congress based on was told members of congress, what mr. paulson told members and i think i asked this question and mr. issa brought this up. you're a sharp guy, m.i.t. graduate, mr. paulson is smart, mr. geithner is smart. you convinced congress you could go in and clean off these assets and yet ten days after that, after we passed this, i didn't vote about it but ten days after you bring -- don't tell them what the meeting is about and you have completely clean gd strategies. so did you know before congress voted

lewis' claim that he would invoking the m.a.c. in back of his deal were credible and had the bank of america decided not to complete the merger would the fed have pursued the removal of their management and board and had the fed ever taken action to remove the management of a private entity before? do your best and -- >> i was concerned initially about whether this was a serious proposal to invoking the m.a.c. because i did believe it would be very detrimental to b of a as well as for the financial system. i never made any threats to mr. lewis regarding removing the board and the management. one example of where the federal rer reserve removed management was a.i. g where there was an agreement the c.e.o. would be replaced upon the consummation of the loan we made to stabilize that company. >>. >> the gentlemanwoman's time has expired. >> thank you, mr. chairman. >> congressman mchenry from north carolina. >> thank you. chairman bernanke, thank you for your testimony. i know this is certainly not easy to recall what happened in thos

lewis ong december 14, 2008, and then he announced his desire or his intention to invoking the m.a.c. then we have a difference of opinion and that is that on the one side some folks are saying that you or mr. paulson threatened mr. lewis, other people say it was simply iron-physicianed encouragement to have him stay in the deal. in any event he did that, he stayed in the deal. there is an interesting e-mail from you and i'm interested in the taxpayers' position. this is from you, mr. chairman, to scott alvarez. had a good conversation with lewis just now, he confirms his willingness to drop the m.a.c., opposition to the deal going forward. and to work with the government to develop whatever support package might be needed for earnings announcements dates around january 20. we discussed his common equity issue, we agreed that having a significant amount of t.a.r.p. capital in the form of common equity was not an ideal solution given the ownership implications. but we agreed both to think about possible solutions, a government-backed capital raise or government common with limited cont

raising concerns that the bank of america might want to avoid it finalizing the deal due to the revelation of m.a.c. ac. however, it is difficult to understand how this came as a complete surprise given reports by "the new york times" that shortly after the deal was announced in september, b of a a had quickly unstalled 200 people at merrill lynch to thoroughly review their books. were any of the 200 bank of america employees responsible for analyzing merrill lynch aware of the potential for the $12 billion loss before you legendly discovered it in mid december? >> -- we did have people there and we did know that there were losses and that was clear both in our company and theirs. we can see that that was happening and there were rumors on the street that that was happening across all finance institutions and we saw evidence of that after the fourth quarter close because we saw most everybody had losses. the thing that caused us to be concerned was the acceleration that we saw when we got the numbers that we did on the 14th. >> did you feel that the reviews of merrill lynch's books were thoroughly