The Fed gets a subpoena

Reuters reports that the House Committee on Oversight and Government Reform has subpoenaed the Federal Reserve in an attempt to persuade the central bank to turn over documents related to Bank of America’s acquisition of Merrill Lynch.

The subpoena comes two days before Bank of America Chief Executive Ken Lewis is set to testify before the House Oversight Committee, which is probing the transaction, what Lewis knew about Merrill's financial condition and potential regulatory pressure to complete the deal.

Lewis, in testimony prepared for the hearing, said he became aware of "significant, accelerating losses" at Merrill in mid-December after the shareholder vote. Lewis has consistently maintained in statements that he did not realize the severity of Merrill's problems until after that vote.

The CEO, who has since been ousted as chairman, also said he told Treasury and Fed officials he was considering declaring a "material adverse change" which would have allowed it to walk away from the acquisition.

This is getting interesting...