Rep. Darrell Issa, the lead Republican on the House Oversight and Government Reform Committee, challenged the Treasury Department and Federal Reserve Board to explain government documents that he said proved they were aware of Merrill Lynch's $3.6 billion in bonuses despite claims otherwise.
According to documents from the Securities and Exchange Commission, which is involved with ongoing litigation with Bank of America Corp. (which purchased Merrill last year) over the bonuses, Joe Price, the bank's chief financial officer, said he provided both then Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke with documents about the bonuses on Dec. 17.
But both Bernanke and Paulson have denied knowledge of the bonuses prior to BofA's merger with Merrill.
In response, Issa said the two regulators need to explain themselves.
"While the appropriate regulatory agencies and courts still need to determine if Bank of America inappropriately withheld information about bonus payments from its shareholders, we know that the company certainly wasn't hiding the information from the federal government," Issa wrote in letters to Paulson and Bernanke. "If you felt that the bonuses were unfair or problematic, you could have at the very least raised additional questions or formally objected before you gave the company an additional $20 billion of taxpayer money."
Issa asked Paulson and Bernanke to answer six questions, including when they became aware of the bonuses, whether they were given any documentation on the bonuses, and if they discussed the bonuses with anyone at Bank of America or Merrill Lynch.
The oversight committee is investigating the handling of the Merrill takeover. The committee has fought with Bank of America over its refusal to provide sufficient documents related to the lawmakers' investigation. Paulson has testified before Congress that he was unaware of the bonuses and Bernanke has said in a statement that the bonuses did not come up in discussions on the merger.
