Why didn’t Ken Lewis tell Bank of America shareholders that the company they were acquiring was set to report an imperial asston of losses for the fourth quarter, information that would’ve been more useful to them before the deal went through, rather than after? ‘Cause Paulson and Bernanke shoved him in the trunk of a Buick, took him to an undisclosed location and suggested in no uncertain terms he keep his trap shut, that’s why! According to testimony from the Bank of America CEO’s February sit down with Andrew Cuomo, Lewis was “urged to keep quiet while the two sides negotiated government funding to help BofA absorb Merrill and its huge losses,” apparently for the good of the financial system and the country, and since he *is* head of America’s Bank, K the the L felt urged to comply (plus the bit about harm to his body if he failed to do so).
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.
Oh, and there was also the matter of Paulson threatening to take Lewis out (of office) if he didn’t do exactly as he was told.
During his testimony, Mr. Lewis described a conversation with Mr. Paulson in which the Treasury secretary made it clear that Mr. Lewis’s own job was at stake. Mr. Lewis still was considering invoking his legal right to terminate the Merrill deal. Mr. Paulson was out on a bike ride when Mr. Lewis phoned to discuss the matter, according to the transcript.
“I can’t recall if he said, ‘We would remove the board and management if you called it [off]‘ or if he said ‘we would do it if you intended to.’ I don’t remember which one it was,” Mr. Lewis said. “I said, ‘Hank, let’s de-escalate this for a while. Let me talk to our board.’ “
For his part, The Hammer is going with the story that Lewis “may have misinterpreted some remarks about the Treasury’s disclosure obligations as referring to BofA’s obligations.”
Question to all the BAC shareholders up in this piece– does this little revelation make you want to bound and gag Lewis more or less? On the one hand, he lied to you. On the other, he (believed he) had to lie to you. And for the general audience– under/over on when Paulson rips KL’s eyeballs out of their sockets and skull-fucks him to death, while Bank of Amerillwide receptionist Angelo Mozilo watches in horror? And finally– how big is the grin on John Thain’s face this morning? Sorta big or, like, shit-eating big?
Crazy like a fox, ole Kenny boy. Anyone who does a Maxine Waters smackdown on live, national TV deserves our respect.
Did he admit this over a few tumblers of single malt at the Sonoma?
So what was the Fed and Treasury’s involvement regarding Merrill bonuses then? Were they aware of untimely payment as well?
So how does this play? Does a misinterpretation of an implied directive from a gov’t official = off the hook for a potential crime.
(crime might be too strong but definite civil consequences to non-disclosure)
KL resigning in 5….4…..3…
Ken Lewis blaming his horrible management on Paulson might kinda-sorta make sense… except what government agency told Lewis to double-down on CountryWide?
Ken Lewis blaming his horrible management on Paulson might kinda-sorta make sense… except what government agency told Lewis to double-down on CountryWide?
boom! roasted.
I guess he doesn’t work for the shareholders anymore. I wonder how that will play at next weeks shareholders meeting?
Puhleez, folks, this version of the story makes a hell of a lot more sense that the crap we have been fed to date. Besides, from what I know of that uber-bully Paulson, it is entirely credible that he made the direct threats that he now claims Lewis “misinterpreted.” Gutless chimp.
@9- who the hell said it didn’t make sense?
the proverbial taxpayer bang bus, that is
This doesn’t make sense.
paulson’s a stuttering idiot. either that, or he’s highly conflicted.
The scene: Buick stopped in a wooded area with trunk open:
Joe Pesci: stabs Lewis in the gut multiple times in a frenzied attack.
Robert De’Niro: emptys quite a few 45 shells into Lewis’ ass
Ray Liotta: shuts the trunk.
the End.
Goldman alum up to the same ol’ tricks.
How did Gasparino not get the scoop on this?
Paulson has shown through his career to be a ruthless political animal who is very good at not getting his hands dirty.Just ask Corzine,Thain and Thorton,or better yet, Alan Schwartz.Bunglers can still be nasty cunning operators.
Lewis, if he worked for the shareholders, would have “leaked” this just like he “leaked” the Thain-office-decor story. Paulson would have had to back off.
Lewis was not against the merger, he had done no due diligence and had no idea how bad MER was. He just wanted an IOU1 from the government and a few billion, not realizing it would cost a lot more.
So – Lewis – you’re either a pussy who doesn’t work for the shareholders, or you’re an idiot. Choose which one you want as your legacy, ’cause right now you have “both” on your CV.
#18, both
So Ken lied to shareholders to save his job. Isn’t that what Skilling, Lay, Ebbers, etc etc etc did as well?
Hmmmmm…can BAC shareholders sue Paulson and Bernarke for screwing them???
It would be outstanding if this cowardly drunk unravels whatever scheme is in place to “save” the global financial system with his erratic behavior.
So regardless of why he did it, didn’t he just admitted he lied (by omission)? Isn’t that grounds for a lawsuit right there? I don’t think lying because the govt told him qualifies as a legal defense (esp since he doesn’t have any concrete evidence).
Lewis *SHould* chuck Bernanke, Paulson, et al. under the bus. Lewis *should* have resigned on the spot. His shareholders should sue this coward into punary.
@24: #18 here. I totally agree. That would have been the move – resign and make it clear to the Board and shareholders that he was being forced into something that wasn’t right for the shareholders.
As someone else said – making BAC shareholders take the hit for MER shareholders is wrong, wrong, wrong.
Lewis’ time is ticking down. Problem is – who would replace him? Not like anyone else there was protesting the deal.
The problem is that Lewis had AGREED to the deal back in Sept. (remember, he didn’t call Fuld back because he was turning down LEH to get a shot at MER).
When the due diligence was getting done, belatedly, 3 months after the deal was struck, THEN Lewis wanted to wiggle out.
So Paulson says: look, *wink wink*, we’ll make sure you don’t take the hit, we just can’t let MER go down, look how the market took the LEH news.
Paulson sees himself as trying to save the greater economy, and that the BAC shareholders were going to have to take a financial hit, rather than seeing every bank go to 0. It ain’t right, but that will be Paulson’s defense, “the greater good”.
Apparently Cuomo is corroborating Lewis’ account in a letter to Congress. Seems BAC tried to back out of the deal on Dec 21 but the Fed threatened to remove the BAC board if they did.
In your face, Steve Liesman. You look pretty silly as Bernanke’s lap dog now.