Has Lewis' Time Come?

Author:: Bess Levin
Updated:: Jan 14, 2019
Original:: Jan 30, 2009

We suppose that just by asking the question the Financial Times seems to think so. To wit:

There is a popular cry for Ken Lewis to do a far, far better thing than he has ever done. But why should the boss of Bank of America's head roll? There are two thrusts to the argument. The first is retrospective: Mr Lewis should be punished for inadequate due diligence before buying Merrill Lynch, which lost $15.3bn last quarter and sent BofA's shares tumbling. The second argument looks ahead: Mr Lewis has so inflamed employee passions at both BofA and Merrill that he can no longer lead the combined bank.

Well fine. If the court of Bank of American Merrilwide can vote on it, so can Dealbreaker.

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Bank of America's CEO [The Financial Times]

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Remember in 2008, when Ken Lewis was all, “Oooh, wait, I don’t know about this Merrill Lynch thing, it looks kinda bad, I don’t think I want to buy it anymore, I’m nervous [bites nails, shifts weight from one foot to the other like he has to pee]” and tried to back out of the deal? And Hank Paulson threatened to stuff him in a meat locker if he did so Lewis said okay, fine, I’ll buy it and then did, without mentioning anything to shareholders about Merrill's impending losses? Well 1) People are still upset about it but 2) Ken was under the impression shareholders were on a need to know basis. Top executives at Bank of America Corp did not tell shareholders just prior to a 2008 vote on its purchase of Merrill Lynch & Co that losses were mounting and expected to weigh down earnings for years, papers filed in private shareholder litigation show. But the bank and former Chief Executive Kenneth Lewis said in their own court papers that they should not be liable to shareholders who claimed to have lacked information they needed to vote on the once $50 billion merger. Lewis also said he had been advised by the bank's law firm and chief financial officer that no disclosure was necessary. No further questions. BofA masked Merrill loss before 2008 vote: filings [Reuters]

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