Bernanke Bites Back

Fed Chairman Ben Bernanke faced down his inquisitors on Capitol Hill on Thursday, insisting the Fed acted in "the highest integrity" in counseling Bank of America (BAC) on its tumultuous acquisition of Merrill Lynch, today's business press report. The Wall Street Journal notes the testimony wasn't easy on the normally reserved Fed chief. "Bernanke faced open hostility from lawmakers who barraged him during a Congressional hearing over his handling of the financial crisis and the central bank's role in reshaping the banking system," it writes. The New York Times saw it the same way. "In three hours of grueling questions from lawmakers armed with e-mail messages and internal documents, the Fed chairman flatly denied accusations that he had threatened to oust the bank’s top management if it pulled out of the deal," the newspaper reported. Business journalists noted they couldn't recall such a harsh reception for a seated Fed chief since at least the 1990s. Bernanke's even-toned reassurances that the federal government did not strong-arm BofA into completing the Merrill deal still isn't sitting well with some lawmakers. Some Republican congressmen contend the Fed pushed a private company to the brink, while the Democrats feel Bernanke and crew were "bamboozled" into bailing out BofA.

In an analysis piece, Bloomberg wonders about the fallout of yesterday's grilling of Bernanke. It concludes the lingering harsh feelings could "reduce the odds" that the central bank will win new oversight powers as envisioned by the Obama administration. Even Democrats are concerned about giving the Fed any more authority following the bullying allegations. "It may be more important for us to find another systemic risk regulator,” Rep. Paul Kanjorski, a Pennsylvania Democrat and member of the House oversight committee, told Bloomberg. Congress should "hesitate to put any more authority on the back of the Federal Reserve," he said.

Did accused fraudster Allen Stanford tap a $100 million slush fund to bribe auditors, thus keeping alive his alleged multibillion-dollar Ponzi scheme? This was just one of the 21 charges federal prosecutors made yesterday in the U.S. District Court for the Southern District of Texas, the WSJ reports. Stanford pleaded not guilty to all the charges and is expected to be released on bail today, Bloomberg reports, replete with an unflattering photo of a shackled Stanford in orange jumpsuit. 

To China now, where a remarkable development is being reported this morning on Sichuan Tengzhong Heavy Industrial Machinery's bid to buy the Hummer car brand off General Motors (GM). According to the BBC, which cites China National Radio, the Hummer sale will be blocked on environmental grounds. The Hummer, once a symbol of Wall Street excess, apparently "is at odds with the country's planning agency's attempts to decrease pollution from Chinese manufacturers," the BBC writes. The green rationale, though, may not be the whole story. China Daily reports a principle concern is that "The National Development and Reform Commission (NDRC), the nation's top economic planning body, may reject the deal on the grounds that Tengzhong lacks the expertise and resources to run Hummer's operations."

A Florida millionaire and client of UBS is the first scalp to plead guilty in the government's ongoing crackdown against the Swiss bank for allegedly helping wealthy Americans hide their income overseas, untaxed. The man is Steven Michael Rubinstein, an accountant involved in the yacht industry and the first American client of UBS's offshore private banking services to be arrested, the NYT reports. UBS is accused of helping America's rich and powerful conceal $20 billion worth of income offshore, far from the oversight of the IRS. Rubinstein faces as many as three years in prison plus fines for filing a false tax return, the WSJ adds. More prosecutions are expected.

Finally, the music world today may be mourning the death of Michael Jackson, the King of Pop, but attorneys, accountants, and auditors may already be lining up to get a piece of his sprawling and tattered estate. "The King of Pop will likely leave behind one royal estate battle," BusinessWeek predicts. In recent years, Jackson succeeded in wooing deep-pocketed financiers, including Los Angeles-based real estate developer Thomas Barrack and Denver billionaire Philip Anschutz, to help him pay off "a conga line of creditors." Jackson was to play 50 nights in Anschultz's O2 Centre in London for $1 million per show starting next month.