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In Charlotte, BofA's Ken Lewis lives on to be investigated another day

By Ward Harkavy in Bankers, Cuomo, Featured
Wednesday, Apr. 29 2009 @ 2:35PM
Bank of America's half-assed leader, Chairman and CEO Ken Lewis, could be literally half-assed after today's stormy annual meeting in Charlotte, North Carolina.

A vote on whether to strip Lewis of his chairman's job is too close to call, says the Wall Street Journal.

No matter what the result of that tally, Lewis is on the way out of both jobs. But it looks unlikely that he will be given the actual bum's rush today. He'll wind up leaving under his own power — but quick. (That's no surprise, especially since it became known a short time back that he was dropping dimes on Ben Bernanke.)

During today's meeting (not a confab that is open to the general public), the bank's directors were elected "by a comfortable margin," the Charlotte Observer reports.

Meanwhile, the WSJ's Peter Eavis ruminates about Lewis's monumental fuck-ups of, first, acquiring subprime bottom-feeder Countrywide and, second, swallowing up Merrill Lynch last year despite knowing the bad shape Merrill was in. Eavis steps far enough back from the current mess to note:

Mr. Lewis could have been a hero of the credit crisis, since he largely steered BofA clear of subprime. But the acquisition of Countrywide was a monumentally mistimed bet [on] the housing market and the originate-and-sell model would recover sooner rather than later. And agreeing to pay 1.8 times tangible book for a teetering Merrill Lynch in September was foolhardy, given that relatively unscathed Goldman Sachs Group had the same multiple.

Mr. Lewis's defenders may argue that, facing Fed and Treasury pressure, he could hardly walk from the Merrill deal. But in reality, the Merrill merger agreement was too restrictive to allow the bank to easily ditch it or to substantially renegotiate the deal on the basis of worse-than-expected marks. It is a contract Mr. Lewis bears ultimate responsibility for.

Coulda, woulda, shoulda — Lewis was not cut out to be "a hero of the credit crisis."

See the WSJ story about Lewis's testimony to N.Y AG Andy Cuomo's this past February about the Merrill deal. That story notes:

The transcripts show that Mr. Lewis was in a similar position in December that he is in now -- fighting for his job and needing to raise more capital. It shows he agreed to do a deal he knew was bad for certain shareholders, believing he was helping the government save the financial system. But he admits in the testimony that he believed the U.S. wouldn't have let Merrill Lynch fail given the lessons learned from the collapse of Lehman Brothers Holdings Inc.

Thus, why not swallow toxic Merrill? Hell, the government was going to provide an antidote, Lewis reasoned.