Are you a Bank of America shareholder who is angry at CEO, (and former chairman of the board) Ken Lewis for going ahead with the Merrill Lynch deal? Well, you’re just mean. It wasn’t his fault. At least, that’s what he’s just testified before the House Committee on Oversight and Government Reform.
Mr. Lewis had previously told the New York Attorney General’s office that he was threatened with a “change in management” if Bank of America backed out of the now-notorious Merrill Lynch merger. Now he says that he went ahead with the deal to save the financial system.
From CNN:
Testifying before the House Committee on Oversight and Government Reform, Lewis said Bank of America nearly backed out of the deal after learning the scope of the losses at brokerage giant Merrill Lynch. But he added that the promise of additional government aid and potential threat to the U.S. financial system prompted the Charlotte, N.C.-based lender to change its mind.
“Even six months later, it is easy to forget just how close to the brink our system came,” Lewis said in his prepared remarks to lawmakers.
Lewis hedged when asked about the pressure he was under from the Federal Reserve, but emails unearthed by Congressional subpoena show Bernanke suggesting to another Fed official that “management is gone,” if the bank backed out of the deal.
BofA’s Ken Lewis defends Merrill deal [CNN]
Live Blogging Ken Lewis’ testimony on the Hill [WSJ]
More From Consumerist
-
Congratulations, Jamie Dimon, You’re The Sexiest CEO In America!
-
BofA CEO: Cleaning Up Countrywide Mortgage Mess Is Like Climbing Mountain With 250 lbs. On Your Back
-
Man Who Helped Citigroup Become A Megabank Says Megabanks Should Be Broken Up
-
Facebook Stock Down More Than 50%, Schadenfreude Still Rising
-
Chase CEO Wants You All To Know "We Live In A Free. Fucking. Country."
Eventually we will look back and figure out whether it was cheaper to just let everything that should have failed, fail or if shoveling the trillions we have is worth the impending large rise in inflation and/or taxes. Unfortunately, letting all that should have failed go under will likely have been cheaper. We’re just too short-sighted.
I wanted to keep my job, so I did something clearly NOT in the interests of this company
Isn’t that how we ended up in this situation in the first place?
@Darrone: No we ended up in this situation because some people wanted big bonuses and created a f*cking mess. We would have had a much smaller correction years (how many?) ago if they hadn’t played the shell game con in the CDS market.
We have two groups of people to blame for this, one is ourselves and the other is the f*ckers that got rich shuffling paper and debt pretending to create wealth. Greed is the motivator in both cases.
Government control of private industry.
Go Fascism!
@woolygator: If they can do better than, then I welcome our new warlords.
@woolygator: “Government control of private industry.
Go Fascism!”
Except that The Fed (which is who threatened him) isn’t government.
@BZMedia:
For all intents and purposes, yes it is. It’s a government agency.
@NeverLetMeDown: “For all intents and purposes, yes it is. It’s a government agency.”
No… it’s not. It is a private, central bank, for-profit corporation. It is about as “federal” as Fedex.
@BZMedia: Well, they both have the letters “F-E-D” in them, which is more than enough for a lot of these guys…
@BZMedia: ROTFLMAO. Oh, wait, you weren’t being funny?
@t-r0y: Nope.
The system is designed so that the Federal Reserve is the only winner. Ever.
Every single dollar that is created / printed, comes with debt attached in the form of interest. So if every dollar comes with debt attached, where does the money come from to pay back the interest? Newly printed dollars, with more interest.
As long as the Federal Reserve exists, we will all be in their debt forever.
How this was ever allowed to happen is a much deeper story, but the nuts & bolts of it is, until the actual real government takes back control of creating money from the Fed, we can never get out of debt.
So all the trillions and trillions being racked up, pumped out, bailed out, stolen or just plain lost, doesn’t really matter. It can never be paid back anyway.
@BZMedia: I was refering to the ‘It is about as “federal” as Fedex.’ line.
I agree with the rest of your comment. The government has some, but very little control over the fed. Being the ‘Lender of Last Resort’ and the ultimate counterfieter.
And just like all counterfieters, they are the first to benefit from the new currency that they print — before it makes its way into the ‘system’ and devalues all the rest of the dollars.
@woolygator: The private industry certainly did well, didn’t it?
@woolygator: wow, not even close, but keep drinking the Kool-aid!!!
I guess Ken Lewis figures that if John Thain can claim to have saved the US economy, Ken is also a hero.
Give these men some bonuses!
@Troy F.: Well, if Bill Clinton can claim to be the “First Black President” and Al Gore claim he “Invented the Internet” and McCain’s aide claim he “Helped Create This(blackberry)”, then why not?
I also claim I’m the “World’s Fastest Browser” and that I am “Taunted By Tittles” and “Angered By Aglets”.
Thanks Ken for taking it on the chin for the good of the country. What a personal sacrifice! Maybe Congress can commission a statue or declare a new federal holiday- Ken Lewis Day. On a personal note Ken, while you are in a generous mood, how about cutting me some slack on the forclosure?
Back in my broker days, the Merrill Lynch guys were the smuggest douchebags on the planet!
This guy is a real piece…
he puts out so much spin his next job should be as a gyroscope.
@HomersBrain: I hope you don’t have that copyrighted because I’m going to use it. Maybe we can rename the head PR guy at companies the “CGO” (Chief Gyroscope Officer).
Ugh. I don’t even know how to respond to this. Lewis is making himself almost as much of a joke as Thain did to himself. Although Thain was 110% douchebag to begin with.
What a saint!
/sarcasm
So to keep his job, he agreed to a deal that wound up costing over 18,000 employees their jobs.
Come on, meteor!
At some point the CEO has to decide whether it’s worth it to f*uck with the government. In the long run, the government can do a heck of a lot more to you than you can to it.
BofA has built up a lot of favor karma by eating the government’s dog food. One day, BofA will ask for a favor back, and get it.
F_ck him. If he did not see what was coming he is a complete moron. Especially sitting where he is sitting (CEO of huge bank).
What kind of reform will the House Committee on Oversight and Government Reform recommend after reviewing this? Nothing, if they want to keep their jobs.
The “material adverse change” clause, if executed to end the deal, would have spun the rapidly-decaying balance sheet of Merrill out into the open market. It is optimistic to suggest that a buyer would have been found, and the likely result was bankruptcy.
It’s easy to forget now that a ML bankruptcy in Nov/Dec of 2008 would have destroyed the banking system and, consequently, every entity in America that relies on debt. There’s an argument out there that such destruction is preferable to the debt alternative, but it’s really 6 in one hand and a half-dozen in the other. Option one, you let all the companies that rely on credit markets go under with the confidence to rebuild in the ashes. We chose to finance the continued existence of our corporations through debt at the cost of future growth. In both cases, the underlying reality is an underlying economy with too many claims and not enough output.
@Unsolicited Advice: The people who argue that letting the global financial system lock up and freeze until things organically heal themselves is optimal are so ignorant that they don’t even know how ignorant they are.
But wait!!! On the 60 minutes puff piece they did on him last fall he was saying how strong the Bank was and that Lynch came to them with their hats in their hands asking for money and to be bought. So which is it?
Here’s more of the story that Consumerist isn’t telling: [www.ft.com]
“It’s easy to forget now that a ML bankruptcy in Nov/Dec of 2008 would have destroyed the banking system and, consequently, every entity in America that relies on debt.”
That’s just a lame excuse with nothing to back it up. Better just everything relying on credit fails. Now capitalism and the republic are destroyed.
They gov’t should have voided all Credit Default Swaps because they were technically illegal to begin with and let everyone fail. A)It would have left stronger banks in a better position to give loans. B)The shareholders and creditors would have taken the hit instead of taxpayers C) There are plenty of local banks / credit unions that could pick up the slack for LEGITIMATE credit. D)We would already be on the road to recovery. Now BofA gets to deal with Merrills $h%t for the next 3 years.
If the deal was not in the best interest of shareholders he should be sued/prosecuted.
@DoctorMD: +1 – Excellent and more concise than I could have put it. That’s EXACTLY what should have happened…but now we have a huge frigging mess. Thank you apathetic and uneducated public…
@DoctorMD:
Exactly why do you think CDS’s were illegal, and why has this escaped notice of this country’s many regulatory and law enforcement bodies for so long?
@DoctorMD: Made unregulated by force of law (thanks, Phil Gramm!) doesn’t not mean illegal.
Save the Merrill… Save the world!
@woolygator: Yeah, because corporate control of government has worked out so splendidly.
Jeff Skilling is sitting in a jail cell today for doing exactly what the .gov TOLD Lewis to do.
Can anyone explain why Ken Lewis still has a job?? The man has run BofA into the ground and is still collecting a paycheck but the president of GM was sacked. How does one go and the other stay???
Lewis is an idiot. FIRE HIM.
@PLATTWORX: “Can anyone explain why Ken Lewis still has a job?”
He lost his Chairman position. Does that count?
Hey Ken Lewis… your credibility is shot. Just give it up man, you have plenty of money…. just retire.