Issa presses Bernanke, Paulson on Bank of America bonuses to Merrill Lynch

The top Republican on the House oversight committee said on Wednesday that federal regulators likely knew earlier than they have said about billions of dollars in bonus payments from Bank of America to Merrill Lynch employees

Rep. Darrell Issa (Calif.) sent letters on Wednesday to then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that refer to information provided to committee Republicans by Joe Price, Bank of America’s chief financial officer.

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Issa said that both Paulson and Bernanke either knew about or officials at their departments knew about the payments by Dec. 18, 2008, according to the two letters.

Issa said the Bernanke told lawmakers that the discussions he had in December did not concern bonus payments. Issa’s letter to Paulson included testimony the former secretary gave indicating he did not know about the payments until January 2009.

“If you felt that the bonuses were unfair or problematic, you could have at the very least raised additional questions or formally objected,” Issa wrote to both Paulson and Bernanke.

Bank of America received $25 billion in the first round of bailout money. The bank later received an additional $20 billion as it struggled amid billions of dollars in losses at Merrill.

“While the appropriate regulatory agencies and courts still need to determine if Bank of America inappropriately withheld information about bonus payments from its shareholders, we now know that the company certainly wasn’t hiding the information from the federal government,” Issa wrote.

The $3.6 billion in payments have become a central issue in several investigations and an ongoing court case. The House Committee on Oversight and Government Reform has held three hearings on Bank of America’s decision to purchase Merrill Lynch at the height of the financial crisis.

Congressional lawmakers have focused their questions on two issues: whether Federal Reserve and Treasury officials pressured Bank of America to complete the deal, which the bank was considering ending, and whether the bank failed to disclose the bonus payments to shareholders.

A Democratic aide said this week that the committee is working to schedule a fourth hearing that would include testimony from officials at the Securities and Exchange Commission (SEC) and Federal Deposit Insurance Corporation (FDIC).