Dennis Is Wall Street's Menace

Congressional oversight is often lacking, but not now. U.S. Representative Dennis Kucinich of Ohio is not your typical capitalistic crony, warming a seat on Capitol Hill while cozying up to wealthy campaign donors. He means business--and means for Big Business to be accountable.

While polling single digits as a presidential candidate in 2004 and 2008, Kucinich insisted that he was Main Street's guy. "The rest of these people," he said of his opponents, "are candidates of a radical corporate structure that takes the wealth of the nation and puts it in the hands of a few." He opposed the TARP legislation passed by Congress last fall, concerned that Treasury Secretary Henry Paulson, an ex-Wall Streeter, was being granted too much power. It was like appointing a fox to guard the hen-house.

Hens should now feel comforted. As Chair of the House Domestic Policy Subcommittee, Kucinich serves as the resident bad-ass rooster on steroids. Last week he went after Bank of America, suggesting in a letter to the Securities and Exchange Commission that the mega-bank had duped its shareholders by withholding material information prior to December's vote approving the merger with Merrill Lynch. Specifically, shareholders should have been alerted about billions in bonuses to be paid to outgoing Merrill executives, bonuses that Kucinich derides as "little more than a farewell gift from senior management to themselves." [For more on the New York Attorney General's investigation into the bonuses, go here.]

Bank of America's stock has been trading like a champ, more than tripling in six weeks. Investors obviously feel that the government has BofA's back and that taxpayers will pick up the tab for civil penalties stemming from any violation of SEC regulations. Meanwhile, Dennis the Menace is prodding the Treasury Department and Federal Reserve to reveal what they knew about the bonuses--and when. After all, they were essentially conservators of the damaged Merrill franchise ever since the September announcement that Bank of America would be taking over. Watch feathers fly if Kucinich can prove a cover-up.

[update, 04-23-09:]
The Wall Street Journal is reporting this morning that Treasury Secretary Hank Paulson and Fed Chair Ben Bernanke encouraged BofA CEO Ken Lewis, in effect, to commit securities fraud. Quoting the report, "Mr. Lewis, testifying under oath before New York's attorney general in February, told prosecutors that he believed Messrs. Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, the struggling brokerage giant." Not only that, Paulson and Bernanke threatened to fire Lewis and to remove BofA's entire Board of Directors if the company persisted in trying to back out of the Merrill deal. The AG's letter to Congress, just released, can be found here.