Paulson played Lewis and Bernanke could not even play softball in a girlscamp

Amazing to read that the Obama admin. is angry and frustrated with Paulson since the biggest part is still in place. Why this moron Lewis still has his job is out of any rational logic but that applies for most executives of wall street. That he paid a premium for Merrill was freaking stupid and weird. Bernanke is just an academic puppet and actually Geithner had more influence on that deal. To much conflicting information and actions - I rather think some people made money on that offer on an insider basis but that is just an assumption of mine. Too many Goldman's in the administration gives a bad taste to all this events - that they received TARP money without having had any loosing quarter up to that point was strange enough. The special deal for JPM (takeover of Bear Stearns) were out of any logic order and the Lehman event was more than obscure. I would have rather questioned Geithner capabilities due to those big mistakes ( actually I do not believe in a mistake) rather than his little tax fraud attempt. Getting a cheque and a memo by the IMF how to handle the taxes was as obvious as things can be even for a man who has a highschool degree but we are talking about a finance professional who is now even heading the IRS. Mr Thain trying to get another bonus in Jan. after his decorating spree. What about Stan O'Neill the guy who screwed Merrill why is there no prosecution of him why can he keep the 180 mil severance package. Why could Thain hire 3 Goldman's for a total of 500 mil in total pay packages for a bankrupt company - why would tough Bernanke allow such a move or Geithner. We all understand why Paulson backed that as its Goldman's secret motto to screw everyone as they did with LTCM and in many other cases under CEO Paulson. They even let the media praise them as hero's and other of their OMEGA Kappa Sculls and Bones buddies and mates toot their horn's in puplic. Its quite obvious now what I heard in a TV show yesterday is a fact -' There is not a 2 class justice system for poor and rich. For the rich is no law at all' .We are still in the dark middle ages the king and his lords and knights can do as they are pleased within their own rules.

In Merrill Deal, U.S. Played Hardball

By DAN FITZPATRICK, SUSANNE CRAIG and DEBORAH SOLOMON

Kenneth Lewis is getting a hard lesson in the new balance of power between Washington and Wall Street.

The Bank of America Corp. chairman and chief executive had agreed to buy brokerage giant Merrill Lynch & Co. in September, possibly saving it from collapse. But by early December, Merrill's losses were spiraling out of control. Internal calculations showed Merrill had a horrifying pretax loss of $13.3 billion for the previous two months, and December was looking even worse.

Mr. Lewis had had enough. On Wednesday, Dec. 17, he flew to Washington, ready to declare that he was through with Merrill, people close to the executive say.

"I need you to know how bad the picture looks," Mr. Lewis told then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, according to accounts of the conversation by people inside the government. Mr. Lewis said Bank of America had a legal basis to abandon the deal.

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Messrs. Paulson and Bernanke forcefully urged Mr. Lewis not to walk away, praising the bank's earlier cooperation -- but warning that abandoning the deal would be a death sentence for Merrill. They said the move also could undercut confidence in Bank of America, both in the markets and among government officials. Despite the blunt talk, Bank of America executives interpreted the comments as a signal that the government was willing to work out a compromise.

Two days later, in a follow-up conference call, federal officials struck a harder tone. Mr. Bernanke said Bank of America had no justification for ditching Merrill, according to people who heard the remarks. A Federal Reserve official warned that if Mr. Lewis did so and needed more government money down the road, Bank of America could expect regulators to think hard about their confidence in management. Mr. Lewis was told that the government would consider ousting executives and directors, people close to the bank say.

The threats left no doubt: The federal government saw itself as firmly in charge of U.S. financial institutions propped up since October by infusions of taxpayer-funded capital.

During the four weeks that followed Mr. Lewis's conference call, federal officials and Bank of America hashed out a deal to salvage the Merrill takeover. The government agreed to provide $20 billion in additional aid for the Charlotte, N.C., bank, and to provide protection against losses on $118 billion in troubled assets.

The money is coming at a price. Six months into the great bailout of U.S. finance, Washington's rescue attempt has helped shore up the system. But that emergency effort, planned on the fly, has taken the government on a risky journey deep into the heart of American capitalism.

Bureaucrats are calling the shots behind the scenes at some of the nation's largest enterprises. Critics of the bailout program say its rules are opaque and its execution ad hoc, leading to a lingering lack of confidence in the financial system. Some lawmakers are scrambling to steer funds to favored lenders.

Federal officials have said little publicly about their oversight of the institutions that received capital from the Troubled Asset Relief Program. Initially, the government seemed reluctant to use the ownership stakes it got in banks ranging from J.P. Morgan Chase & Co. to Saigon National Bank as leverage over bank executives.

But the tough negotiations with Bank of America, along with recent moves by federal officials related to executive compensation and other issues, suggest that the government's attitude toward the troubled banking industry has changed, as financial markets have deteriorated further and political ire has risen.

When Citigroup Inc. took $25 billion in TARP funds in October, the executive-pay section of its pact with Treasury was just two sentences long and vaguely worded. A second rescue, for $20 billion in December, limits Citigroup's executive bonus pool for 2008 and 2009, requiring that a majority of 2008 bonuses be paid on a deferred basis.