Back in January, the Treasury Department and the Federal Reserve bailed out Bank of America, investing $20 billion (on top of an earlier $25 billion) and, with help from the FDIC, guaranteeing losses on a pool of troubled assets. That came after BofA had purchased Merrill Lynch, a move that soon backfired when Merrill posted billions in losses. BofA's CEO, Ken Lewis, says he was strong-armed by the government into making the Merrill deal and keeping it quiet. The Fed denies that.

Fed Chairman Ben Bernanke is set to testify before the House oversight committee today as part of the panel's ongoing investigation of the Merrill acquisition and the ensuing government bailout. In addition to questions about whether he forced Lewis to keep the deal quiet, Bernanke will also be asked about Fed e-mails that show squabbling among regulators. The e-mails, according to the Wall Street Journal, show that FDIC chief Sheila Bair objected to the FDIC's role in the bailout, or as one e-mail put it, she "hates it and doesn't want to play."

Another e-mail shows that when a Securities and Exchange Commission official caught wind of the approaching deal and wanted more information, one Fed official cautioned another not to give too many details, just "broad and tentative outlines" of the government's plans, and to note that the Fed considered the matter of "systemic importance."

Other links this morning:
AIG to Repay $25 Billion in Fed Debt Through Unit IPOs (WSJ)
SEC Would Tighten Reins on Money Markets (WaPo)
Some Chrysler Dealers See Lending For Car Inventories Cut Off by GMAC (WSJ)

Follow @paulkiel