Bank of America's Lewis Defends His Misbegotten Deals

Unbelievable. Amid the calamity his do-deals-no-matter-what mentality has visited upon shareholders, Ken Lewis tells Maria Bartiromo—with a straight face—that at BofA (BAC) since he’s been CEO, “every acquisition was a good acquisition.”

Can he be serious? Here’s a list of the major deals BofA has made under Lewis’s watch:

Countrywide

FleetBoston

LaSalle

MBNA

Merrill Lynch

At a minimum, the least-unsuccessful of these has a) diluted the heck out of existing shareholders, b) made BofA ever larger and more unmanageable, thus boosting Citi-like regulatory and operating risk, and c) brought about prior-year financial restatements which render the whole enterprise unanalyzable by outsiders.

And those were the “good” deals. The bad ones, meanwhile, have brought the company to the brink of insolvency.

It’s absurd for Lewis to try to defend his M&A track record. The Merrill disaster we all know about, of course. LaSalle, meanwhile, became a hollowed-out shell almost from the moment the deal closed, as LaSalle bankers fled to Chicago competitors. MBNA was a prototypical, mistimed, top-of-cycle consumer deal that will cause BofA’s credit costs to balloon in coming quarters. As for Countrywide, Lewis says the company is “on fire” now. Maybe so. But Ken was enthusiastic about Merrill too, right up to the moment he wasn’t. Oh, and now he says that buying Merrill really was a good idea, after all.

The man is delusional. Through it all, BofA’s stock has fallen by 75% since Lewis took charge. From the stock’s peak in 2006, roughly $235 billion in shareholder value has been destroyed. Pathetic.

Tom’s right. Lewis has got to go—and so should the board that hired him.

Comments

[apppro]

While the hindsight in this case may be evident, you still have not placed any true blame on the shorts that drove the price down and thru rumorboarding and blatant nakedshorting, caused most of the above damage. Sure Ken did the deals, but who destroyed them?

Everyone keeps blaming the CEO's and still no one calls for a short to be put to task.

Let's play the shorts theme song one more time:
"No.. no.. no it ain't me babe! It ain't me you're looking for .. babe!"

2009 Feb 11 07:24 AM

[tjohn1]

Not only this man, every one did the same thing. Sandy Weill did exactly the same thing. Mindless acquisitions, big is better thinking and colluding Wall Street Analysts, easy money by the Fed and unfettered greed- these are the things that created monsters like Bank of America, Citigroup and JP Morgan Chase. Now they are unraveling, another monster, the U.S Government , is trying to stop the implosion. All signs of a superpower on fast track to being a banana republic in no time. God help America!

2009 Feb 11 07:25 AM

[Yahoo User]

NO. You are delusional Mr. Hill. If you were aware of the facts involving BAC's acquisition of MER you would know that the Fed and Treasury forced BAC to acquire MER. You would also know that the Wall Street Journal published the these facts on Feb. 6 and anyone still blaming Lewis looks like either a lying paid basher or just delusional.

2009 Feb 11 07:26 AM

[bw6458]

who cares whose to blame... the bonus', the demise of the world banking system and the incredulous desire of greed is going to destroy the hopes and dreams of millions of people...
The shorts and the way the system works in every component is at fault.
God save the world,,,, see you on the bread line 2010

2009 Feb 11 08:53 AM

[john s. gordon]

you have to remember that BofA is not really BofA. Nationsbank in north carolina having acquired an unpleasant aroma due to too many go-go acquisitions just had to take over BofA (mr. giannini's california institution) in order to get rid of the nationsbank name.

the nationbank mentality persists in the executive suite.
> jack

2009 Feb 11 09:23 AM

[User 357119]

I agree the short-sellers are the real problem. No investor in the their right mind would get back in this market while the hedge funds have the ability to manipulate the market. Bring back the uptick rule that Cox and The SEC took away to protect investors. Bring back Glass-Steagall to protect bank depositors and let the investment banks take the risks that should not be taking.
www.investopedia.com/a...

On Feb 11 07:24 AM apppro wrote:

> While the hindsight in this case may be evident, you still have not
> placed any true blame on the shorts that drove the price down and
> thru rumorboarding and blatant nakedshorting, caused most of the
> above damage. Sure Ken did the deals, but who destroyed them? <br/>
>
> Everyone keeps blaming the CEO's and still no one calls for a short
> to be put to task.
>
> Let's play the shorts theme song one more time:
> "No.. no.. no it ain't me babe! It ain't me you're looking for ..
> babe!"

2009 Feb 14 03:59 PM

[User 362442]

John,

You could not be more wrong in your assessment. As a former Nationsbanc and B of A employee, the culture in our firm changed overnight almost when Ken Lewis took over. Prior to that, it was an environment predicated in certainly being the biggest and the best, but not cutting corners, not cheating, lying or stealing. Employees were mostly treated with care and respect, unlike the numbers they are treated like now. Hugh McColl, as tough as his outward protrayal was, was a kind and generous man to his employees. Ken Lewis is a dog who is only concerned about his own riches and welfare. Do not spread unfounded rumors and lies about a once great firm, which has now turned into a sess pool from the top down


On Feb 11 09:23 AM john s. gordon wrote:

> you have to remember that BofA is not really BofA. Nationsbank in
> north carolina having acquired an unpleasant aroma due to too many
> go-go acquisitions just had to take over BofA (mr. giannini's california
> institution) in order to get rid of the nationsbank name.
>
> the nationbank mentality persists in the executive suite.

2009 Feb 23 08:53 AM