Why Can't Bank Executives See in the Mirror?

Recent complaints by Citi's (C) Pandit and Bank of America's (BAC) Lewis can only leave investors shaking their heads.

Vikram Pandit said Friday that "rumor mongering" was at the heart of the company's stock slide and called in Gov't officials on Thursday to re-instate the short sale ban. It should be noted that this was tried earlier this fall, and , well, stocks fell anyway. Not sure what Pandit hopes to accomplish here. He also said the bank has plenty of liquidity and will not break itself up.

I can believe #1 but still do not understand #2 at this point. There have to be assets that can be sold to raise equity. Citi has $2 trillion of them. Something must be able to let go...

Now, watch Ken Lewis in Chicago Thursday. Lewis blamed "lax regulation" for much of the problems today. Was he forced to loan money? Was he forced to pay billions for Countrywide when he could have just stood still and watched it go into bankruptcy? Was he forced to overpay for Merrill Lynch (MER)? He bought it and paid what he did "before someone else bought it". Now, if we listen to what Lewis said above, then his reasoning behind buying it then was flawed. If that model can no longer survive, then had he waited, he could have bought it far cheaper and no, Ken, no one else wanted it.

Ever notice how little we hear from Kovacevich at Wells Fargo (WFC) and Dimon at JP Morgan (JPM)? It seems the only time we hear from them is when Dimon is bailing out another institution or Kovacevich is complaining about being force fed TARP funds he does not want.

Whining about short sellers has never entered into the conversation.

Lewis and Pandit are seeing their companies in their current positions due to poor decision making. Lewis has no one to blame but himself for very poor acquisitions recently. Both the businesses he bought and the prices he paid should have never been attempted. Pandit can blame the mess he inherited on former CEO Chuck Prince but cannot excuse the near year of inaction he has since held rein over.

Don't invest in companies who blame other for the stock and performance slide.

Disclosure: Long WFC

Comments

[jasonjim:]

Why don't you write something half decent that is going to help the economy recover, instead of all your damned negativity toward everything. When stocks of perfectly good companies are falling 40% in one day, why don't you write an article about reinstating the uptick rule in order to settle the market down. What is the matter with banning short sales temporarily, say for a year, to get a more orderly market? Or perhaps you like disorderly markets because you like to short stocks, along with all the rest of the greedy bastards who care more about their own pockets than they do for their own country's welfare. A pox on all your houses, I hope someday the tide reverses and you lose all of your misgotten gains.

2008 Nov 24 09:35 AM

[HBWOW:]

Todd, you failed to mention that Ken Lewis accepted the $15 billion from the bailout monies and promptly spent $5 billion of it buying a China bank stock which he "feels" is a good investment. 1) His track record stinks as to his management capabilities and certainly to his prior "investments", 2) I don't believe he has the authority to do this transaction and certainly not with Paulson's blessing, 3) Is it "possible" that he might have received a kickback or "finder's fee" for this absurd betrayal of the public's and stockholders' confidence? 3) Should not the government regulators take an indept investigation of Mr. Lewis and all his dealings?
With managment like this, how can we go wrong??????? WOW

2008 Nov 24 10:06 AM

[RCA:]

> perfectly good companies are falling 40% in one day...

Where have you been the last three months! These companies are anything but good! Many are, in fact, the embodiment of evil. They are anything but good in their business model and they are anything but good in their behavior.

> What is the matter with banning
> short sales temporarily, say for a year, to get a more orderly market?
> Or perhaps you like disorderly markets because you like to short
> stocks, along with all the rest of the greedy bastards who care more
> about their own pockets than they do for their own country's welfare.

That's rich! It is the egregious, immoral greed of the management at companies like AIG, Lehman, Countrywide, Citigroup, and on and on... that created this crisis! Now you want to ignore that colosal greed, and whine about short sellers being greedy?

Did any of the executives at those companies put the country's (let alone the stockholder's) welfare above their greedy self interests? Now they want the people they cheated (the taxpayers) to bail them out with billions of dollars and protectionist, socialistic legislation!

The only way to restore confidence in the markets is for the public to see that evil fails. A complete washout of the perpetrators of this crisis is absolutely needed for the good of the economy and the country. You should be directing your pox toward the evil companies and the evil men in charge of doling out $700 trillion+ of taxpayer money to try to save them.

Paulson and his cronies are responsible for causing this mess. Now this unelected fox has been put in charge of the chicken coop to ensure that the poor slobs who have done no wrong and pay their taxes will get fleeced to save his evil pals.

His goal is not to save America. His goal is to save the greedy bastards who are destroying America and the free markets. His goal is to perpetuate the sytem which allows evil and greed to triumph over honesty and forthrightness. His goal is to ensure that the greedy rich stay rich and the middle class and poor are held accountable for ensuring that it succeeds.

2008 Nov 24 11:03 AM

[M-P:]

This piece is spot-on ... it's not like Todd is bashing all banks or financial services. Wells and JPM did not take the risks that BAC and C did ... not taking responsibility for poor DD or risk management is a classic external locus of control - thinking of BAC and C, who are confusing cause and effect ... the reason they are short seller magnets is because of their lack of transparency, risk exposure, and poor acquisitions. They caused the attraction, not the other way around. Mature executives take responsibility for their actions - they don't blame others.

2008 Nov 24 07:31 PM

[Silverforce:]

You could not be more correct about Ken Lewis of Bank of America if you tried. In fact, if you go to this website www.justiceandlight.co.../
you will be shocked by his arrogance and cruelty towards distressed homeowners trying to stay in their homes and not be through out
on the street. In New Mexico, that means staying out of 5 foot snow drifts in
the middle of winter but Ken does not give a damm in a whole lot of peoples opinions!!

Billions in Taxpayer bail out money given to Bank of America and their using it
to buy other banks and increase the size of their empire. What does congress do in spite of Bank of America corporate actions? Congress just recently gave Bank of America another 20 BILLION Dollar cash infusion to play with!!!!!

America does not belong to the people. America belongs to the corporations inside of America. Don't even get me started on what Freddie Mac is doing right now. Funny how scum collects in groups??


On Nov 24 10:06 AM HBWOW wrote:

> Todd, you failed to mention that Ken Lewis accepted the $15 billion
> from the bailout monies and promptly spent $5 billion of it buying
> a China bank stock which he "feels" is a good investment. 1) His
> track record stinks as to his management capabilities and certainly
> to his prior "investments"... 2) I don't believe he has the authority
> to do this transaction and certainly not with Paulson's blessing,
> 3) Is it "possible" that he might have received a kickback or "finder's
> fee" for this absurd betrayal of the public's and stockholders' confidence?
> 3) Should not the government regulators take an indept investigation
> of Mr. Lewis and all his dealings?
> With managment like this, how can we go wrong??????? WOW

Jan 17 10:55 AM