Cut Ken Lewis Some Slack - For Now

This is old news but I wanted to throw out a couple of thoughts about Ken Lewis and his impending departure. I have no great admiration for the guy nor do I think he particularly deserves a whole lot of sympathy, but I do think that some of the vitriol that has been directed his way by the MSM and the blogosphere has been over the top.

Felix Salmon made a good point in a post yesterday when he said that running a mega bank was not something that any individual was capable of doing. He suggested that so long as the government supports the business model with supportive fiscal and monetary policies it was practically impossible not to be profitable. He expresses surprise that Pandit of Citi (C) has outlasted Lewis and then has this to say about Pandit:

Meanwhile, if the board starts looking at external candidates, all such candidates must be thinking in the back of their head that a very similar opening is likely to appear at Citigroup sooner rather than later. Vikram Pandit has done amazingly well just to outlast Ken Lewis — his ability to stay in his job is impressive, even if it’s largely a function of the fact that Citi has no succession plan. But as the last of the great destroyers of value still to be drawing a paycheck, he can’t last much longer.

Note that while Felix thinks that bank CEOs cannot positively influence the outcome of their institutions, he seems perfectly willing to assert that they can destroy the bank. This makes no sense logically but it does typify the sort of disparagement that has been dealt out to Lewis and others.

We really have no idea and probably won’t for years as to whether Ken Lewis was a bumbling idiot or simply a capable banker who got caught in one of the worst storms ever to hit the industry. History, unfortunately, takes time to be written and put in a proper context. Many who put pen to paper or fingers to keyboard have nevertheless come to the conclusion that Lewis is one of the worst of the worst and have not shied from so stating.

Lewis’s real problem was never about his ability to run a bank but rather about his looks, demeanor, background and geographic location. He isn’t Jamie Dimon-smooth and he looks like a man either in a permanent state of confusion or one about to rip out a subordinate's throat. He never made any bones about his middle class background nor about his strong desire to succeed, and running a bank based in Charlotte automatically knocks you down a lot of pegs in the viewpoint of the New York crowd.

Jamie Dimon bought Bear Stearns and got a sweetheart deal from the government to make it work. Ken Lewis bought Merrill Lynch and went back after the fact to get their backing. Little is said of Dimon’s deal while Lewis is vilified for everything connected with the Merrill acquisition. Once again, we don’t know the outcome, or for that matter the truth about the events surrounding either event, yet many seem more than willing to draw unsupportable conclusions about both, and the men who were involved.

Ken Lewis is likely nothing more than a run of the mill banker who made it to the top through driving ambition and probably a lot of luck. He had the bad luck to be at the top when the world started falling apart and likely will pay dearly for that. He’s going to pay a price for that bit of timing and it seems to me that the media should climb down off his back for now.

There will be plenty of time for some honest retrospective analysis when the facts are fully known.

Comments

[waf76]

Felix Salmon writes too many articles per day to write anything with any substance in it. He might as well just tweet. As for Pandit, at least he's got a Far East connection for Citi where the real growth will come from. Ken Lewis tried to do the right thing too little too late.

2009 Oct 03 01:33 PM

[logicalthought]

>>Ken Lewis is likely nothing more than a run of the mill banker who made it to the top through driving ambition and probably a lot of luck.<<

This (along with Nocera's column in today's NY Times) strikes me as an excellent assessment of the guy-- i.e., a classic incarnation of "The Peter Principle". However, I'm not sure why we should "climb down off his back" when he's an arrogant ("I've had all of the fun I can stand in investment banking") liar (note his contradictory testimony in Washington) who has personally made tens of millions of dollars by incompetently building a "too big to fail" institution that-- because of his buying sprees-- has drained away billions of our tax dollars. Lewis looks to me like a classically phony, insecure, back-stabbing CEO (not, as Nocera notes, a "true leader"), and as far as I'm concerned, the press-- as long at it sticks to the facts-- can have a field day with him. (And, lol, even though it may sound like it, I swear I've never worked for-- nor was fired by-- the guy!)

2009 Oct 03 02:52 PM

[notsosmart]

$3 mil a year retirement for a job so poorly done makes one wonder what has happened to our capitalistic system. the citi guy is busy putting in $16,000 crapper.well,at least the stadiums are beginning to thin out some.still,most of the beer swillers have no idea whats coming. maybe they are better off.

2009 Oct 03 03:20 PM

[apppro]

Makes me vomit when I read or hear about anything now that is about BoA or Ken Lewis, but not for the reasons you might think. I've had enough of all the CEO bashing and negativity. I am of the camp that this crisis was short inspired and all the hysteria is only being generated by option traders/traitors. Whether you agree with that or not, one thing is for sure - all this negativity and hysteria must stop if we are to rebuild what a few have destroyed. This short term trading & thinking must end. Investing is not on an hourly basis, and we are destroying everyone's will and desire to build and prosper.

2009 Oct 03 04:30 PM

[rosey99]

Interesting, especially the comparison to Pandit at Citi. I would point out that an ongoing investigation into the Citi-Merrill deal may have played a role. We just don't know yet. I read that Lewis walked out the door with less than $200 million (plus or minus) altogether, and that means he is probably more of a laughing stock than ever to the Wall Street crowd. I think Henry "Hank" Paulson made a lot more than that in tax breaks alone when he left GS and went to Treasury. Compared to the puppetmasters in New York, the guy looks like a piker.

2009 Oct 03 04:34 PM

[rosey99]

Oops. . .Meant to say BofA-Merrill deal. Not
Citi.

2009 Oct 03 04:35 PM

[Nathaniel C]

Ken Lewis is a criminal who looted BofA shareholders of hundereds of millions of dollars to "compensate his superior talent." All he did was buy other companies. His whole goal was to create a global financial empire like JP Morgan. He ruined BofA with his ill timed Merrill Lynch deal. He could have simply waited for Merrill to enter chapter 7 liquidation and aquire the wealth management division which was the only good thing about Merrill Lynch. This would have been what a smart person would have done (Barclay's did this with Lehman). Instead Ken Lewis paid 50 billion for an insolvent firm which almost imploded BofA and screwd shareholders out of ten's of billions. Lewis is a failure who will walk away with millions which he stole form BofA shareholders.

2009 Oct 03 10:08 PM

[tommiegun]

Mr Writer you are an idiot. You don't become the top guy at the largest bank in america by being a "run of the mill banker" at a bank with over 300,000 employees.

Do yourself a favor and try not show your ignorance by writing about your thoughts as little as possible.

2009 Oct 03 10:58 PM