As the story points out, as a publicly-traded company, Bank of America had a responsibility to disclose such information to its shareholders. But the government essentially told it not to. Bailing out Wall Street as a whole seemed more important, as the Fed believed that the whole financial system could collapse if BofA shareholders balked at the deal, the Journal reported. As the deputy dean of Yale Law School, who was quoted in the story, said, “Regulators are supposed to tell you to obey the law, not disobey the law.”

The downright disturbing actions by the Federal Reserve and U.S. government during the Wall Street bailout of 2008 just reached a new high (or, more accurately, low). This is just one in a series of bombshells coming out of the financial sector meltdown. Between this and the post-wreckage Merrill Lynch stories (the insane executive bonuses, Former CEO John Thain’s extravagant decorating bonanza), the bailout becomes a bigger folly every day. Or maybe a bigger tragedy.

“Our 2008 discretionary bonus pool was 41% lower than 2007. The size of the pool, its composition and the timing of the payments for both the cash and stock were all determined together with Bank of America and approved by our Management Development and Compensation Committee and our Board,” he said.

The Daily Beast reported that Thain spent a total of $1.22 million in company money to trick out his office with, among other things, an $87,000 area rug and a $35,000 “commode on legs.” In another greedy instance, Merrill Lynch accelerated bonus payments just before the closing of its sale to Bank of America, according to the Financial Times. Bank of America is set to receive $20 billion in TARP money, according to the FT. That’s a lot of area rugs.

The S&P 500 dropped 59.01 points, closing at 1,192.69. That’s the biggest single day drop since Sept. 11, 2001.

According to Lehman, none of the company’s broker-dealer subsidiaries or other subsidiaries of LBHI was included in the Chapter 11 filing and all of the U.S. registered broker-dealers will continue to operate. Neuberger Berman, LLC will continue to conduct business as usual.

Lehman’s bankruptcy will reportedly result in the loss of 25,000 jobs, and the liquidation of the company, as negotiations with foreign wealth funds failed when the Federal guarantees failed to materialize. Such guarantees were made for Bear Stearns, when JP Morgan acquired it in March.

In the shadow of events, the Federal Reserve Bank has created the new Term Securities Lending Facility (TSLF), which could provide support and liquidity to the stressed markets. The Federal Open Market Committee announcement is scheduled for Tuesday, as is the Treasury International Capital (TICS) data, which will announce the amount of foreign capital entering or exiting U.S. markets.

Tuesday should be another intersting day.