House chairman: Fed e-mails raise questions about merits of $20B Bank of America bailout

House chairman questions Bank of America bailout

WASHINGTON — The top Democrat on a House investigative committee says internal e-mails by Federal Reserve employees raise serious questions about $20 billion in government aid provided to Bank of America to buy Merrill Lynch.

Rep. Edolphus Towns of New York calls the money a “dowry for a shotgun wedding.” The chairman of the House Oversight and Investigative Reform Committee said Thursday that questions remain about what happened exactly and “who was holding the shotgun.”

The panel is investigating claims that top government officials, including then-Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, urged Bank of America to go through with the acquisition and not to disclose to shareholders the details of Merrill Lynch’s deteriorating financial state.