Bank of America CEO Ken Lewis has sparked controversy in his recent testimony to regulators. Lewis has revealed that he was threatened, by then-Treasury Secretary Hank Paulson and Chairman of the Fed Ben Bernanke, to buy Merrill Lynch, a company drowning in financial losses of billions of dollars. Lewis explained that Paulson and Bernanke presented him with an ultimatum: if he did not buy the ailing corporation, they would fire him and his Board of Directors. Recognizing that Bank of America, a company with its own financial problems, would not be capable of assuming Merrill Lynch’s financial woes, Paulson and Bernanke assured Lewis that Bank of America would receive TARP funds to compensate. Moreover, Lewis was forced to keep all this information hidden from his shareholders.
Paulson and Bernanke’s stated goal in preventing Lewis from revealing the developments of the company to its own shareholders was to “restore financial confidence.” Now that their role has been disclosed (which was bound to happen), the exact opposite will occur. Indeed, this story is receiving so much press today precisely because of the complete lack of financial confidence it inspires.
How is financial confidence to be restored when the government is engaging in such shady deals? How can an investor trust that he is receiving the information he is legally obligated to receive when he knows the government itself may be scheming in the back room to keep this information from him? How can the market stabilize in an environment in which insider trading, considered a crime when private individuals do it, is actively done by public officials under the pretense of “public good?” Why would people feel confident in the economy when their wealth might slip away at any moment because the decisions they made were based on information deliberately distorted by the government?
Paulson and Bernanke have not only failed to restore any confidence in the American economy, they have actively worsened the lives of many, such as those of the stockholders of Bank of America who made purchases and investments under the false premise that Bank of America’s finances were much stronger than they really were.
As with all government projects wrapped in the veneer of good intentions, Paulson and Bernanke did not hesitate to exploit the individual American to achieve their allegedly noble ends. Consider the choice they presented to Lewis: to either face the wrath of these politicians or commit fraud. It is abhorrent that our nation has come to the state in which thugs, masked as our political leaders, have no problem threatening to ruin people’s lives unless they agree to be complicit in a crime. Furthermore, they then later throw that same individual under a bus, evidenced by their silent endorsement of the intense criticism Lewis is receiving for deceiving his shareholders.
Our government today is not a protector of our rights, like it was at the inception of this nation. Instead, Ken Lewis’ testimony makes it quite clear that these days the government unashamedly sacrifices our rights to meet its own agenda.
The Undercurrent is a magazine distributed at college campuses and communities across the country. We release a print edition once per semester, and in the interim, regularly post additional articles, blog entries, and campus media responses reports to our website.
The Undercurrent's cultural commentary is based on Ayn Rand's philosophy, Objectivism. Objectivism, which animates Ayn Rand's fiction, is a systematic philosophy of life. It holds that the universe is orderly and comprehensible, that man survives by reason, that his life and happiness comprise his highest moral purpose, and that he flourishes only in a society that protects his individual rights.
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