Tuesday, April 28, 2009

The Curious Case of Bank of America's Ken Lewis

Tomorrow BofA CEO Ken Lewis goes on trial. The annual shareholder meeting has become a referendum on the decisions, and legacy, of Ken Lewis. Let’s parse the data.

Why He Should Stay as CEO

1. Who else is there?
2. Paulson and Bernanke came at him with a baseball bat in a dark alley – what choice did he have but to buy the much-maligned Merrill Lynch?
3. Up until September 2008, Lewis was a seen as a star of the banking industry, even winning the “Banker of the Year” honors from American Banker.

Why He Should Be Removed as CEO

1. Despite the Paulson-Bernanke takedown, Lewis did not have to make the Merrill deal. The simple truth is that he wanted this deal, badly, to demonstrate to the world that BofA was king of the hill, and just as importantly, that he could go one better than his mentor, former BofA CEO Hugh McColl. To Lewis, Merrill was a dream of a company, one that had an enormous emotional attachment for him personally. McColl never acquired Merrill; Ken Lewis did. Wow!
2. How many lives should one CEO have? Countrywide; Merrill; TARP lifelines; the John Thain debacle; testimony to Cuomo that may yet land Lewis in more trouble than even he could imagine; first quarter earnings chock full of one-time gains based on increasing the valuation of toxic assets on the book; characterizing these results as evidence of “a testament to the value and breadth of the franchise;” outraged shareholders and institutional investors who finally have had enough; news that Treasury stress tests indicate BofA needs more capital, yet again. By my count, that makes 9 lives…

The Bottom Line

I don’t know Ken Lewis personally, and I have no reason to believe he is not a good person. But, the evidence is now overwhelming that Ken Lewis is an incompetent CEO. What shareholders and the board cannot, or will not, do, Ken Lewis should do for himself. The one solution that will be best for Bank of America, and best for Ken Lewis and his personal dignity, is clear. He should resign.

You may say I'm a dreamer, but (perhaps) I'm not the only one.

1 comment:

  1. There are plenty of consumer comments that can be found on Pissed Consumer.

    Bank of America has created a lot of upset people. It is starting to show. Please check out Bank Of America complaints on other sites.