BofA CEO squeals like a stuck you-know-what, points hoof at Bernanke, Paulson
Bank of America chief Ken Lewis is fighting off critics by doing what he does best: Passing the buck for a bad deal.
Instead of passing the buck(s) to himself and his execs, the beleaguered bank CEO is passing the blame to Bush regime czar Hank Paulson and Fed chair Ben Bernanke for telling him to zip his lip about Merrill Lynch's woes last year when BofA swallowed up Merrill. That turned out to be quite the bad deal, at least in the short run.
But hey, Lewis says, I didn't do it. Listen to Bart Simpson's version here.
Lewis may very well be right in this particular instance of devious behavior by the previous administration, but it's doubtful that he fought very hard against those instructions.
It's not in doubt, however, that he and BofA are under tremendous pressure right now, not only from the current administration but from investors. (See "Plunging market calls 'Bullshit!' on Bank of America's 'profits,'" April 21.)
Here's the Wall Street Journal's version this morning of Lewis's dropping a dime on people who are no longer in charge:
Mr. Lewis, testifying under oath before New York's attorney general in February, told prosecutors that he believed Messrs. Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, the struggling brokerage giant. As part of his testimony, a transcript of which was reviewed by the Wall Street Journal, Mr. Lewis said the government wanted him to keep quiet while the two sides negotiated government funding to help BofA absorb Merrill and its huge losses.
Under normal circumstances, banks must alert their shareholders of any materially significant financial hits. But these weren't normal times: Late last year, Wall Street was crumbling and BofA faced intense government pressure to buy Merrill to keep the crisis from spreading. Disclosing losses at Merrill — which eventually totaled $15.84 billion for the fourth quarter — could have given BofA's shareholders an opportunity to stop the deal and let Merrill collapse instead.
"Isn't that something that any shareholder at Bank of America...would want to know?" Mr. Lewis was asked by a representative of New York's attorney general, Andrew Cuomo, according to the transcript.
Seeking Alpha's staff highlights the exchange (see its 8:24 a.m. entry from this morning):
Q: Were you instructed not to tell your shareholders what the transaction was going to be?
A: I was instructed that 'We do not want a public disclosure.'
Q: Who said that to you?
A: Paulson ...
Q: Had it been up to you would you [have] made the disclosure?
A: It wasn't up to me.
Q: Had it been up to you.
A: It wasn't.
Cutting through the bullshit, this is Tom Lindmark's take on Seeking Alpha: "BofA CEO Rats Out Bernanke, Paulson." Lindmark aptly notes:
