Bank of America's Acquisitions: What Was Ken Lewis Thinking?

| About: Bank of (BAC)

Bank of America (NYSE:BAC) is in big trouble. Notwithstanding its own credit issues, a slowing business cycle, and horrible macro conditions, it actually paid $100 billion for acquisitions in the last 5 quarters. This company wasn't even, in my opinion, worth $100 billion in the last 5 quarters. Talk about subprime borrowing!

Two of those acquisitions were the largest companies in their respective industries, along with the largest problems caused by the Asset Securitization crisis (or one could say caused by them).  Merrill Lynch (MER) led Wall Street in asset value writedowns, and I don't think it was really all that aggressive in doing so. Countrywide is a gaping radioactive cesspool of liabilities and underwater assets. It actually has practically as much in REOs (dollar value) as performing mortgages. This makes it effectively a real estate company - against its will. The legal liabilities appear to be near limitless.

What was Ken Lewis thinking when he bought these two companies? Integrating a large acquisition is hard enough, doing 5, with 2 being the largest in their respective (very large) industries during the worst credit and real estate downturn since the Great Depression, as your own credit and earnings metrics deteriorate in the face of nearly $10 billion + worth of legal liabilities seems to be  a form of corporate hari kari. Then again, what does a lowly blogger know about the intricacies of high finance and corporate machinations...