Catch-22

The recent disclosure that Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernake pressured Bank of America to complete the purchase of Merrill Lynch in December, after learning of $15 billion in additional lossess at Merrill, illustrates the monstrous impact government intervention in the economy has produced.

BoA was excoriated by its shareholders for completing the Merrill deal in the face of such staggering lossess, but we now learn it felt it had to do so in order to satisfy the government.

BoA should have been free to pull out of the deal, or renegotiate its terms to make it more attractive in light of the new losses. Instead, its shareholders have subsidized the losses at Merrill that the government would have borne absent a BoA deal.