Ken Lewis's days may be numbered. Despite today's voodoo earnings out of BofA (BAC), both investors and analysts have already seen through the non-recurring and one-time benefits, as well as the accounting sleight of hand used to justify the "outrageous" earnings. If Lewis was hoping the results would be greeted with the same foolish smile that accompanied Wells Fargo's (WFC) early rushing of its detail-free earnings pre-announcement, he was wrong. In fact, the proxy fight to bounce Lewis seems to have only gotten even more traction.
The Deal reports that Jonathan Finger, a partner with the BofA shareholder group Finger Interests Number One Ltd., is now even more set on getting Lewis thrown out of Lou's Gov't Bailout Tavern. In a letter to The Deal, Finger is quoted as saying:
"1. We believe this earnings report does not change a thing with respect to our campaign. This is the same management team and board of directors that failed to protect shareholders in the Merrill Lynch transaction, which is permanently dilutive to shareholders. We believe investors will afford this company a higher valuation if there is a more independent board. Four proxy voting services agree with us.
2. On first blush, a good portion of the earnings are from non-recurring items - sale of some China Construction Bank shares and write ups on fixed income securities at Merrill Lynch. The company was able to add to its loan loss reserve, so that is good news. Simply due to the recession, the company will face a number of quarters of higher loan loss provisions.
3. We would encourage investors to look at the balance sheet as well as the earnings. Non-performing assets were up substantially. The Company still has large exposure to consumers through its lending areas, and all of the questionable assets acquired from Countrywide and Merrill Lynch are still on the balance sheet."
Of course, Finger is correct in his assessment of BofA's earnings. And with Thain long gone, Lewis will be hard-pressed to find a scapegoat to bear the blame, as more and more shareholders finally find a prominent figure to follow, as their desire to manifest their anger leads them, pitchfork armed, straight to the corner office. Hey Cuomo, how is that whole bonus investigation going?