The Fed engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies, Representative Darrell Issa said in a statement released to Reuters.
Bernanke has, in the past, denied any inappropriate pressure on Bank of America. Fed spokeswoman Michelle Smith on Wednesday referred to a letter Bernanke sent Representative Dennis Kucinich on April 30 and later testimony in which he offered an unconditional assertion that he did not ask Bank of America CEO Ken Lewis to withhold information regarding Merrill.
The Federal Reserve acted with the highest integrity throughout its discussions with Bank of America, Bernanke wrote to the Ohio Democrat, who chairs a subcommittee on the Oversight panel.
The Democrat who heads the committee, Edolphus Towns of New York, has called Bernanke to testify on Thursday. I am not going to prejudge these issues. We are not even close to finishing the Bank of America-Merrill Lynch investigation at this point, Towns said in a statement.
Former US treasury secretary Henry Paulson has also been called to testify before Congress next month about the Bank of America-Merrill Lynch transaction. His planned appearance was confirmed in an e-mail from Jenny Rosenberg, an aide to Towns, who said no date had been set for Paulsons testimony.
After rescuing Bank of America in January, US regulators tightened their grip on the bank with a secret agreement that contributed to the ongoing shakeup of its directors and executives, the Wall Street Journal said, citing people familiar with the matter.
At least some of the banks ratings also were lowered by regulators earlier in the year, the people told the paper.
Bank of America could not be immediately reached for comment on the Journal report.
The paper, citing internal documents, added that Federal Deposit Insurance Corp. Chairman Sheila Bair wrote to Bernanke before the aid to the bank was unveiled to express the FDICs discomfort with the deal.
Democrats on the panel have focused on whether Bank of Americas Lewis illegally misled investors about Merrills finances, while Republicans have zeroed in on whether the Fed and former treasury secretary Henry Paulson inappropriately pressured Lewis to seal the deal.
The issue has become a political football as lawmakers look to blame someone for the troubled deal amid taxpayer anger over the billions of dollars the government infused into banks to try to ease the world financial crisis.
A Democratic source close to the committee said Republican members leaked documents just before a hearing earlier this month where Lewis testified. They framed the story by looking at only a few of the documents, said the source, who was not authorized to be quoted on the matter.
Some Democrats believe Bank of Americas Lewis had to know about Merrills deepening losses and that Lewis was threatening to pull out of the deal as a way to get more assistance from the Fed. Still, the Democratic source said, The Fed does not come out smelling like roses.
Kucinich said what is remarkable about the situation was that the Fed required no changes in the banks leadership or conditions on the billions that did go to Bank of America. The bank, which did not return a phone call seeking comment, has taken $45 billion in bailout funds from the government.
Other documents released by the committee earlier this month revealed that a Fed analysis found deficiencies in the due diligence conducted by Bank of America prior to the Merrill deal.
Earlier this month, the same panel questioned Lewis about whether he was pressured to complete the deal with Merrill, which lost $15.8 billion in the fourth quarter of 2008. Lewis told the lawmakers that Bernanke never asked him to keep secret any information the bank wanted to disclose to shareholders.