He made plenty of mistakes but he was a goat from the beginning as he never had what it takes to play with Wallstreet mobsters like Paulson - he was completely overwhelmed by the situation and followed the lead of Goldman ( Paulson ) rather than to make his own calls.
Mr summers is sitting in the background and might be cheered up as the position he aimed for is now ready for him to take over as the new power legislation bolstering the FED's authority is made for him right from the beginning. The defense of Obama for Bernanke was formally but not expressively supportive anyway.
I do not believe he will get another term and he was heavily discredited in today's hearing as it will help the current government to make him the goat who sinned and move on to clear the air for the future.
Bernanke Defends His Record on Bank of America Talks
By Craig Torres and Scott Lanman
June 25 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the central bank acted with the “highest integrity” in talks on Bank of America Corp.’s takeover of Merrill Lynch & Co., defending his record against some lawmakers who have alleged officials’ actions were inappropriate.
“The Federal Reserve acted with the highest integrity throughout its discussions,” Bernanke said today in testimony to the House Oversight Committee. He said that “in retrospect,” the Fed’s actions have strengthened Bank of America, Merrill and the financial system and protected taxpayer interests.
Legislators are trying to determine whether Bernanke overstepped his authority in pressuring Bank of America to complete the purchase of Merrill. Bernanke’s record on the issue and lawmakers’ reactions may also figure in whether he will be reappointed by President Barack Obama, and in debates on overhauling the Fed’s powers and responsibility.
“These are the kind of questions that need to be answered before the president makes his decision,” Elijah Cummings, a Maryland Democrat and member of the committee, said in a Bloomberg Television interview earlier today.
Bank of America Chief Executive Officer Kenneth Lewis told the committee earlier this month that he decided to proceed with the takeover of Merrill after regulators said they might remove management and because his company’s future was “intertwined” with Merrill’s fate.
Completing the purchase of New York-based Merrill was in the best interests of the bank, Lewis also said June 11. He cited the potential benefits to the company, as well as consequences for the bank if the deal was scuttled and the financial system was disrupted.
Republican lawmakers who have consistently opposed government rescues of financial companies have accused the central bank of overstepping its authority in pressuring Bank of America to absorb Merrill Lynch.
Republican congressional staff wrote in a memo on documents received by the House panel from the Fed through a subpoena that a “gun placed to the head of Bank of America” forced the Charlotte, North Carolina-based bank to go through with the merger, which was announced in mid-September.
Representative Darrell Issa, the ranking Republican on the panel who voted against the $700 billion financial-rescue program last year, also said the Fed withheld concerns about the deal from other agencies.
Bernanke today said he didn’t threaten that Lewis would be fired if the bank didn’t go through with the Merrill deal. He said the takeover came at a time of “extreme stress in financial markets,” and noted the government had taken extraordinary steps to prevent the collapse of systemically important firms, including Citigroup Inc., Fannie Mae, Freddie Mac and American International Group Inc.
Bernanke said in the testimony that the Fed didn’t try to limit public disclosures or force the merger. He said in answering questions that he also “personally” informed Federal Deposit Insurance Corp. Chairman Sheila Bair and Comptroller of the Currency John Dugan about the Bank of America situation.
“I did not play a role in arranging this transaction and no Federal Reserve assistance was promised or provided” when the acquisition was announced on Sept. 15, Bernanke said.
Bank of America in December considered retreating from the Merrill deal because of large losses at the brokerage firm. Merrill reported a $15.8 billion loss during the fourth quarter.
The Fed chairman said if the deal fell through it “might have triggered a broader systemic crisis” that could have enveloped both Bank of America and Merrill. Also, if Bank of America cited adverse changes at Merrill as a reason for retreat after three months of preparation, it might raise questions about the bank’s own risk-management and due diligence, Bernanke said. Finally, use of the so-called MAC clause could provoke “extended and costly litigation,” he said.
“The decision to go forward with the merger rightly remained in the hands of Bank of America’s board and management, and they were obligated to make the choice they believed was in the best interest of their shareholders and company,” Bernanke said. The Fed’s actions “have strengthened both companies while enhancing the stability of the financial markets and protecting the taxpayers,” he said.
The Fed chairman said neither he nor any member of the Fed “instructed, or advised Bank of America to withhold from public disclosure any information relating to Merrill Lynch, including its losses, compensation packages or bonuses, or any other related matter.”
He said the disclosures “belong squarely with the company, and the Federal Reserve did not interfere in the company’s disclosure decisions.”