The politics of the Bank of America-Merrill Lynch deal were on display at a much awaited House hearing featuring Ben Bernanke. "I did not tell Bank of America's management that the Federal Reserve would take action against the board or management," Bernanke said, as reported by the AP. "Moreover, I did not instruct anyone to indicate to Bank of America that the Federal Reserve would take any particular action under those circumstances."

My sense is that this will blow over without serious damage to Bernanke's career as head of the Federal Reserve. Some might argue that he's indebted to some degree to none other than Bank of America CEO Ken Lewis, who frustrated some lawmakers when he testified in a previous hearing that he was not made to feel his job was at stake. The pressure he felt came from the potential effects on the entire financial system if his bank didn't go forward with the deal.  

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