Bloomberg reports

Bank of America Corp. Chief Executive Officer Kenneth D. Lewis may face scrutiny by the U.S. Securities and Exchange Commission for failing to disclose mounting losses at Merrill Lynch & Co. because of pressure from federal regulators to complete the takeover.

Former SEC Chairman Harvey Pitt said he has “no doubt” the agency will investigate. Lewis was obligated to make full disclosure to shareholders even with the regulators’ pressure, Pitt said in a Bloomberg Television interview.

The allegations in Cuomo’s letter suggest Paulson and other policy makers may have resorted to breaking securities laws to protect a fragile financial system, according to Peter Sorrentino, a senior portfolio manager at Cincinnati-based Huntington Asset Advisors, which has about $13.3 billion under management and doesn’t own stock in Charlotte, North Carolina- based Bank of America.

“Everyone involved knew that was a clear violation, that’s material non-public information, so basically we just closed the rule book during the crisis and said we don’t care, we need to keep the lights on, and we’ll deal with that manana,” Sorrentino said. “Logic went out the window and they were just acting out of fear,” he said. It was “completely panic mode.”

So… the SEC that condones all sorts of illegal activity for years will suddenly turn over a new leaf and enforce against the Treasury?  … not hardly.

See Clusterstock post here . Something tells us the Bernanke, Paulson, Ken Lewis conspiracy is just the tip of the iceberg.  We’ll be needing current Treasury players under oath too soon.

“Hank Paulson has recanted on what he  told Andrew Cuomo, which was that Ben Bernanke asked him to threaten to oust Ken Lewis and the Bank of America board if Lewis decided not to go forward with the Merrill deal.”

and here:

“So far, all we have is the Bank of America (BAC) CEO’s story, but if Attorney General Andrew Cuomo is actually serious about figuring out what happened, then he has to get both Ben Bernanke and Hank Paulson under oath. And if there are serious disagreements between what they say and what Lewis is saying, then someone’s committing perjury.”

As Bill Black said:

“This whole bank scandal makes Teapot Dome [of the 1920s] look like some kid’s doll set. Unless the current administration changes course pretty drastically, the scandal will destroy Barack Obama’s presidency.”

Here is a link to New York Attorney General Cuomo’s letter to the SEC, Elizabeth Warren, Barney Frank and Chris Dodd regarding the government’s coverup of the extent of Merrill’s losses by threatening Ken Lewis to keep quiet or lose his job.  Let’s hope Cuomo and others keep the backbone to chase this wherever it leads.  Geithner’s office could be center stage before too long…

Hopefully, Cuomo will also find the courage to investigate Goldman while he’s at it.  Ken Lewis will probably lose his job…and sing like a canary afterward…