This one can and should get ugly. They’re probably both goners by the summer, so we’re just talking about who goes first. In the above graph (fig. A), I handicap the odds and add some color for those who haven’t been keeping track.
In this corner, we have Kenneth Lewis, CEO of B of A (NYSE:BAC), a southern gentleman who’s made one ginormous mistake after another before and during the credit crisis. The ridiculous acquisitions of Merrill Lynch and Countrywide have been well documented here and elsewhere, so here’s a quick recap:
Lewis owns the hot mess that is B of A entirely. He built it, he neglected the risk exposure, he staffed up with i-bankers at the top of the bubble, he committed the cardinal sin of doubling down on his Countrywide investment when it went the wrong way, and he bought Merrill Lynch for tens of billions on a Monday when it would have been bankrupt by that Thursday and ultimately handed to him for nothing. And the taxpayers have been called in multiple times to bail this sucker out while Kenny’s bank allowed for a disgraceful bonus free-for-all behind everyone’s backs.
And in this corner, we have Vikram Pandit, the CEO of Citigroup (NYSE:C), who stumbled into the company once most of the damage had already been done. Pandit can’t be blamed for the bank’s over-the-top expenses or its world-beating mortgage CDO exposure. He showed up as a result of his hedge fund being acquired by Citi at a bubblicious valuation once most of that toxic exposure was already brought on and neglected by his predecessor. That said, Pandit has been as slow as molasses to shed assets, cut costs and shed salaries.
Both Lewis and Pandit are under siege as we speak. The latest on Lewis is that a dissident shareholder group led by Jonathan Finger wants this guy out yesterday. If he can get the votes and some help from the board, Lewis will be southbound shortly. The classy thing for this failed emperor to do would be to step down, but he probably cares more about his reputation or worse, he has some perverted sense of duty to the company which he delusionally believes needs him. I think the stock pops 30% on news of his ouster.
Pandit, who I calculate as more likely to get booted (by the Feds no less), probably deserves it a bit less than Lewis, as he came in late to the disaster, but either way, he will not be missed.