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The Congressional hearing we need

Once again the folks on Capitol Hill are spending time on a sideshow and ignoring the main event. What I’m talking about is today’s second round of Congressional hearings into the awful merger of Bank of America and Merrill Lynch. 

Today’s featured witness is Gentle Ben Bernanke. Republicans on the House Financial Services Committee are determined to show that Bernanke twisted poor Ken Lewis’ arm, forced him to complete the Merrill acquisition and then covered it up. Meanwhile, Democrats want to prove that the BofA chief executive tried to blackmail the Fed and Treasury into coming up with financial aid to make the deal more palatable.

The truth, of course, probably lays somewhere between these two stark visions of reality. Or maybe it’s something entirely different.

But the point is, who really cares. As I’ve said before all this attention about the behind-the-scenes mating dance between BofA and Merrill is besides the point. Congress still refuses to hold a full-scale hearing into the root causes of the financial crisis.

Fink reaches for Wall Street’s crown


Matthew GoldsteinYou have to marvel at the seemingly Midas touch of Larry Fink.

The BlackRock Inc. chief executive avoided taking over the helm of Merrill Lynch — something John Thain probably wishes he had done. Fink’s firm emerged from the financial crisis as the Federal Reserve’s favorite private money manager, with BlackRock getting the lion’s share of the government’s work for managing troubled assets. And the $13 billion deal Fink just reached with Barclays Global Investors has turned BlackRock into the outright titan of the asset management world with $2.7 trillion in other peoples’ money under management.

It’s often been said Jamie Dimon is the new king of Wall Street. But one can argue that the 56-year-old Fink, who started BlackRock as a small bond investment shop two decades ago, can also rightfully lay claim to that honor. Even as the Obama administration is about to announce its plan for managing so-called “too big to fail” financial institutions, Fink’s BlackRock is getting bigger and more consequential than ever.

The BofA sideshow

Pay no attention to the folks in front of the TV cameras. That’s the way you should view today’s Congressional hearing into whether federal regulators pressured Bank of America CEO Ken Lewis to follow through on the bank’s acquisition of Merrill Lynch.

Frankly, it really doesn’t matter whether Fed Reserve Chairman Ben Bernanke and former Treasury Secretary Hank Paulson threatened Lewis to carry through on his commitment to buy Merrill on the eve of Lehman Brothers bankruptcy. Based on the pieces of leaked emails to a select group of reporters, there is evidence that Bernanke and Paulson did do a lot of arm-twisting.