Bank of America's Lewis Defends His Misbegotten Deals

Feb.11.09 | About: Bank of (BAC)

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 (NYSE: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:





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.